China already has been doing that. No need to help them do that.
Sanction means those uncompetitive local startups don't have to compete with established players, giving them chance to catch up.
However it acts like one much more so than many other countries, and especially under Xi jinping.
See also https://archive.is/ZoShw (NY Times Who Owns Huawei? The Company Tried to Explain. It Got Complicated. 2019)
This is how Huawei was set up decades ago. They would have had no reason to hide or obfuscate their ownership back then. They used a legal device - the union holds shares on behalf of the employees - to get around restrictions on the number of shareholders in a private company.
I wish more people knew or understood this. The central government, as much as it wants, doesn't have great control on the local level. It's even enshrined in a Chinese idiom: 天高皇帝遠 or "Heaven is high and the emperor is far away". Furthermore, China's model is actually quite decentralized. There's a lot of freedom at the provincial and local level -- it pretty much has to but the CCP has been able to leverage it to experiment with different ideas at different provinces.