I think it would be more correct to say that quality control in Chinese science is very poor. I have seen top quality research, and I have also seen crap that should not have been published at all. But the sheer quantity of output means that the next big discovery in <insert field> will be from China.

OSTP is focused on removing regulations to science and tech bc they argue they are slowing us down in the AI race against China.

I don't work on AI, but in my field I have seen the insane speed and scale of Chinese research. Now I'm from a developing country; the US can probably give better funding than we can, but I am inclined to agree that Chinese science does benefit from easier and better funding and a faster administrative process.

AI data in China is very poor likely bc of the lack of regulations

The big problem for AI research in China seems to be a shortage of high-end GPUs due to the trade wars. China is very strong in maths and comp sci, and they are finding workarounds, but it is still a pretty hard barrier.