You don't see a difference between giving prize money to university teams vs recruiting children under the age of 18 and then putting them through a 4 year program where they are expected to enter AI research for military purposes and the candidates are explicitly vetted for loyalty to the government before entrance?
The Chinese are more efficient? Take an 18 year old, toss him or her into a college that does the challenge, get a job at one of the defense contractors later. The Chinese employee is able to do the same thing about 4 years earlier.
Your answer seems given in bad faith, but it's worth answering anyway.
There are many other things you learn and things you can go on to do as [engineering student] at [university]. Doing a [resume-boosting challenge] is one small part of your universe.
On the other hand, when you are entering a special program for weapons development and giving press releases about how long you've been studying about guns... your intentions and the expectations for you are very different.
Who do you think sponsors high school math competitions in the US?
It's the NSA. They use it for making decisions on scholarships that require working at the NSA during and after college. In order to work there (and thus to accept the scholarship), you must get security clearance, which includes being vetted for loyalty.
The existence of these types of programs isn't troubling. It's the belligerent geopolitics of the state that are troubling.