It's a bad explanation because it assumes decision making about LLM releases is centralized in the CCP even though every AI lab has a different strategy. Some publish LLM research with small models but seem to be staying out of the race to the frontier (Weibo), some train large models but publish few research details and no weights (Bytedance, iFlyTek), some decide on a case-by-case basis what they publish or not (Alibaba, Baidu), ...
There is no rule that every Chinese LLM company must open-source their models, and many don't.
I'm aware of Article 17 of the Company Law of the People's Republic of China https://english.court.gov.cn/2016-04/14/c_761425_2.htm "The grass-root organizations of the Communist Party of China in companies shall carry out their activities in accordance with the Constitution of the Communist Party of China." but not any rule requiring them to be in leadership positions specifically. Maybe you could point me to it?
Even if there's a party member at the C-level of some company making day-to-day business decisions, that doesn't necessarily mean they're carrying out detailed instructions from higher-ups in the party as opposed to following their own best judgment. The CCP generally doesn't micro-manage everything, but operates more in a "mission tactics"-like way, where the top level gives out a broad goal that gets condensed down into a slogan like "new productive forces," and interpreting and elaborating on the details is left to lower levels who seek to align their initiatives with the top-level goals (e.g. by describing AI as a "new productive force") and initiatives that appear successful will get blessed as official policy.
That different companies follow different strategies when it comes to model releases is clear evidence that there is no unified party line on this question yet.
There is no rule that every Chinese LLM company must open-source their models, and many don't.