> The government was both going to demand, and fund local companies creating a competing product and was already doing so long before sanctions arrived. Nothing about the sanctions sped up the process in the least.
Whatever encouragement or pressure the Chinese government was applying was insufficient to get manufacturers like Huawei to switch to domestic suppliers. Chinese companies still worked with established companies like TSMC, until forced by US sanctions to switch to worse domestic alternatives.
> CCP could just do the same thing to themselves via a trade ban on imported goods.
They could, but a domestic trade sanction, just like foreign sanctions, would guarantee at least near-term damage to Chinese companies.
Domestically, Beijing would be seen as the responsible party for the resulting economic damage, causing resentment towards the government, with no actual guarantee of self sufficiency. Companies, in general, do not care about having a domestic supply chain; they want to increase profits.
Internationally, other countries would also see China as the initiator of the conflict, and those that are negatively affected may want to respond with sanctions of their own, escalating it beyond what Beijing intended.
The risk analysis is different between foreign sanctions and domestic sanctions. In the end, the Chinese government was not prepared to take that risk, but the American government was.
Whatever encouragement or pressure the Chinese government was applying was insufficient to get manufacturers like Huawei to switch to domestic suppliers. Chinese companies still worked with established companies like TSMC, until forced by US sanctions to switch to worse domestic alternatives.