If no one develops on Chinese chips, then they’ll never actually be competitive.

People will develop on Chinese chips because they're cheaper and more open-sourced. Also, because their specs are written in Chinese rather than English and that's their native tongue.

But today, it’s able to run the domestic game Black Myth WuKong at 4k at 40 fps.

That's not because of a chip import policy the state issued last week. Someone's obviously working on these things, even without a bunch of state-issued trade restrictions.

What this has rang through out China I am sure is, China has to do everything on earth to fix their software. If that means banning NVIDIA, so be it.

NVIDIA does not have the export capacity to feed the entire Chinese state's demand for new hardware. Never did. The real reason for a domestic Chinese investment in tech is that China is also a global leading consumer. They need to fab their own chips for the same reason they need to build their own cars and grow their own rice. Their economy can't work as an import economy when they represent 16% of the global population.

This change in policy will undoubtedly accelerate domestic investment in new software. But it wasn't strictly necessary.