I have worked in the IC industry for a long time. There used to be more IC layout and design work, but the industry in the west never established really efficient processes to get low volume IC's done with relaxed lithography (eg. .18 u). The EDA companies had reactive business models that forced them to cater only to large customers doing cutting edge designs.
So what I think and hope will happen with China getting involved is that we will see a new industry emerge where we can get IC's done cheaply in relaxed lithographies, packaging and layout at the same site perhaps. They will force the issue, this should be good for everyone.
An eye-opener to me in working on this story was the fact that China's IC industry investment funds can go global. China's private equity investment fund could have a huge impact on yet-to-be-played-out M&A scenarios for chip companies outside China.