My understanding is that some Huawei routers simply don’t play nice when it comes to setting DNS servers on your lan. Even if you put a local IP they attempt to connect to it via the WAN port rather than the LAN.
There’s some information on this thread on their support page:
If it’s possible to disable the DHCP on your model and use Pi-hole’s DHCP server instead that may be worth a try.
Or, if it's not possible to disable the DHCP server, see if it's possible to set the lease pool to 1 address and then make that one IP as reserved for a MAC address that doesn't exist on the LAN.