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The trade problem with China is respecting ownership, particularly ownership of IP.
Every other issue is secondary.
The Chinese communist party is accustomed to complete ownership of everything and everyone within their borders.
In the terminology made famous by a badly-translated video game . . .
. . . China has an "All your base are belong to us," problem when dealing with the rest of the world.
The RISC (Reduced Instruction Set Computer chips) concept was developed at UC Berkeley made into an increasingly huge number of copyrighted variations by Bill Mensch Jr at his Western Design Center from 1978 forward.
A number of companies licensed this extensively copyrighted / patented technology including ARC International, ARM Holdings, Rambus and MIPS Technologies. All of these companies essentially rent IP which is more than 25% US munitions content. If you don't know what you need to license, IP aggregators can help you: Design and Reuse; ChipEstimate; or ChipPath.
Every product which includes chips, whether cars, elevators, aircraft, dishwashers, cell phone transmitters, cell phones, data switches and transmission equipment, have one of these firms design the complete system for them or they buy chips from a company that has already done that.
Huawei licensed everything from ARM Holdings. China can certainly set up a design company to develop chipsets which don't patented or copyrighted designs. This effort would take many years but given the potential size of China's internal market their chips designs could be used widely enough that they are not cost-prohibitive in comparison with the current global market IP standard.
Any short-cut which involves using existing protected IP owned by others would quickly be found and litigated. China couldn't export violating products and they'd owe royalties for violating products sold within China. China's communist party might refuse to pay and they'd start having their assets around the world seized and sold.
Their brash, "All your base are belong to us" attitude isn't going to work out for them, so they have to find a different persona for dealing with those around the world who are not their slaves.
