The chinese government heavily subsidises EVs in a way unsuitable for the EU for example

How exactly else do you think other industrialised societies have developed high-tech manufacturing? South Korea, Japan, the former USSR... All of it was through protectionism, you can't outcompete a historically more developed industry (UK, Germany, USA) in the free market. The neoliberal dogma is that countries should focus on the sectors in which they're competitive even if they're low value-added, the reality is very different if we look at history.

Not happy with protectionism, though, the US and EU are now outright applying sanctions and bans to the Chinese economy, such as preventing them from importing high-tech lithography systems and technology. It's an economic war with China because the western hegemony is finally coming to an end and the west doesn't want that.

Also, china has really done a bad job diplomatically to place itself as a rival of the US

China placed itself as a rival of the US? The US is literally propping Taiwan, an island full of US military bases, and regularly sailing their warboats between the island and mainland China. Can you imagine if China had military bases in Cuba and they sailed warboats between the island and Miami? Or in Mexico and central America? Because the US has military bases all over southeast Asia. It's not "china placing itself as a rival of the US", it's simply the US imperialism resisting being overtaken.