China is experiencing very fast knowledge-driven growth as it catches up to already-produced knowledge that it can cheaply import.

To the extent that AIs other than the most advanced project can generate self-improvements at all, they generate modifications of idiosyncratic code that can’t be cheaply shared with any other AIs.

I say it's at least as expensive for China to import knowledge. A fair amount is trade secrets that are more carefully guarded than AI content. China copies on the order of $1 trillion in value. What's the value of uncopied AI content?

We don’t invest in larger human brains because that’s impossible with current technology

No, we have technology for that (selective breeding, maybe genetic engineering). The return on investment is terrible. In an em dominated world, the technology for building larger minds (and better designed minds) may still be poor compared with the technology for copying. How much will that change with AGI? I expect people to disagree due to differing intuitions about how AGI will work.