Superficially, it sounds like a good idea. And maybe it is. But, there are some negatives:
1. As you said, It possibly discourages revenue for the US AI "industry"
2. If the Chinese actually need a US AI for something, I should think they are perfectly capable of renting it while claiming to be Future Venture, Inc and running the interface through a proxy located in Capetown or Buenos Aires. One suspects that the CIA/NSA worry about that very thing. They (the 3 letter boys) probably will produce more thorough reports internally using methods they likely won't discuss.
3. Running those reports costs time and money. And the reports will likely be legally required for decades if not for all eternity. Long past the last date of any possible need.
4. Assuming that AI is more than a foolish passing fad like NFTs or cryptocurrency (Potemkin money), is encouraging the Chinese to develop their domestic AI industry such a great idea? On the other hand, if it turns out that AI is a pointlless and expensive resource sink, maybe the idea has some merit.
5. If the Chinese have any sense (they appear to have a lot), They'll do any AI work that's strategically important on their domestic systems -- even if it takes a bit longer