You don't assume the "enemy" will just bow down. Your policies must include their reaction. Like playing chess, you aren't just checkmating the king.

The best scenario for the west would've been to integrate themselves into the chinese high tech supply chain, such that their indigenous companies cannot exist without massive state subsidies (because they aren't in a position to compete), which drains other aspects of the state's budget, and in turn, allow the western companies the profits required for further innovation and new tech.

The export bans and the rhetoric around that is so short sighted. The loss in profit will directly affect the research into the next generation. The lack of western tech means the chinese indigenous chip makers will, by necessity, invent the tech themselves.