China was behind the frontier before they suddenly weren't (K3). Just using American models would never have achieved that (not that they could have anyway, but the point still stands).
If they want European models (whether for regulatory or other reasons) then they have to accept it, whether they like it or not, because Mistral is not competitive. Personally I don't believe Europe as a whole can compete, being cutthroat these days is just not in their culture anymore like it is in Silicon Valley in the US and China as a whole.