Chinese competition can always be banned. Example: Chinese electric car competition

Just in one particular country. That hurts their labs, but there are ~190 other countries in the world for Chinese to sell their products to, just like they do with their cars.

And businesses from these other countries would happily switch to Chinese. From security perspective both Chinese and US espionage is equally bad, so why care if it all comes down to money and performance.

That's what OP was saying, I think, noting that running them locally won't be a solution.

Also Chinese smartphones. Huawei was about 12-18 months from becoming the biggest smartphone manufacturer in the world a few years ago. If it would have been allowed to sell its phones freely in the US I'm fairly sure Apple would have been closer to Nokia than to current day Apple.

If Huawei was never banned from using TSMC, they'd likely have a real Nvidia competitor and may have surpassed Apple in mobile chip designs.

They actually beat Apple A series to become the first phone to use the TSMC N7 node.

I don't think it will matter too much in the long run, 8 of the top 10 smartphone manufacturers are Chinese, there's nothing the US government can really do.