> I mean, this sentence is self contradictory, no?

As others have pointed out, no, not at all. For specifics, see the chart from this link posted by another commenter: https://hai.stanford.edu/news/inside-the-ai-index-12-takeawa... . If anything, Chinese models are closing the gap with US models, not falling behind.

> Feels like divorcing hardware from the equation is discounting a big part of winning this race.

Depends on what race you're talking about. When it comes to "who has the most powerful models", I'd argue it's actually not really that significant - China obviously has the power to train good models.