So how long will it take until Asian Phone companies using Android get together to develop an alternative Android ecosystem? They could set it up in a neutral nation with profits going to all companies. So far, these always failed because it was only one company involved (e.g. Amazons app store) but will all major manufacturers involved, it would be much more profitable for developers to be on that app store than on Google's (they could be compatible at the start anyway).
In the end, the one loser from this action is more likely Google than Huawei. And I believe they know that very well but had no alternative but to act this way.
I could go one step further: Build another open source OS that can run Android app but not Android. Many Chinese companies already tried it (non-open source though) before but been persuaded not to, I guess they're feeling a little bit different now.
The good part is, by building that OS, the domestic tech communities could receive a huge boost.
So far for Huawei, Google's blockage is partly useless. As long as Huawei can sell device globally, they can just build their devices in such way that allowing their users to load custom ROM into it without effect warranty, then their users can just use LineageOS (Huawei's Android UI is a crap anyway) or a Linux distro etc. (Maybe the first hackable phone from a major manufacturer)
BTW: In China, not a single one domestic phone manufacturer I know of ships Google service with their phone. So Google service is largely an non-existence.
It's not as easy as it may sound like.
There have been attempts:
https://sailfishos.org/wiki/Android_Compatibility
https://github.com/anbox/anbox
https://www.omgubuntu.co.uk/2019/04/new-project-brings-andro...
ChromeOS Android container approach is probably the best, but isn't fully open source to my knowledge.
That's not to say that a state actor like China couldn't pull it off. It would actually be quite interesting if the outcome of these developments was significant effort into a Linux distro that runs well on multiple devices, and is capable of also running Android apps seamlessly.