I agree that if the US puts sanctions on all Chinese banks, companies, which is a nuclear option, would probably accelerate the decline of the US dollar as global currency.
However the key word is ALL. If the US only puts sanctions on Huawei, that will have close to zero impact on the dominance of the USD, Lets be real here, China's historical growth has always depended on a certain extent to access to foreign markets, financial institutions, foreign technology, etc.
If we lose access to those things, it is unlikely we can maintain a 6% growth rate or even a growth at all. Technology development will probably slow down as well. If companies realize that it may not be worth investing in R&D, if it puts them in the target of US sanctions, vis-a-vis Huawei.
So to say that we will be 4x the us market in the future or whatever projections, is pretty dumb thing to say, because we won't be able to get to 4x the US market size, if China is being constantly hobbled by US sanctions.
The only reason why we were able to have this economic miracle in the first place, was because Deng Xiao Ping, put aside politics, ideology, pride, etc. to focus on economic development. We had rapproachment with the US, because we stopped our aggressive world communism revolution rhetoric, we had rapproachment with Japan because we put aside the differences about WW2. In return we got technology, investment, and access to markets, via normalization of relations and membership in WTO.
The two choices we have:
1) We sacrifice some of our pride: Put away the territorial disputes with ASEAN, Japan, India for now. Doesn't mean we have to concede anything, just tone down the aggressive rhetoric. Solve tensions with the EU over Xinjiang reeducation camps, "Unfair" trade practices and find commonalities that both sides can support: Paris Agreement, Multilateralism, Globalization, etc.
2) We continue our disputes with all these nations and the EU, and end up making a bunch of enemies, that we have to fight, while the US laughs at us while we exhaust our energy feuding with ASEAN, India, Japan, EU etc.