> Just restricting foreign competition in the domestic market is not enough ...

Yes, It is not sufficient but I would argue it was necessary. In case of China it allowed them to have a set of domestic copycat companies like Baid, Alibaba and Tencent, that enabled high demand for local engineers to serve their needs and that allowed to have a large pool of competent domestic engineers which now can benefit other emerging sectors too. It keeps surprising how many top contributors to large OSS projects are from China.