Since returning to the White House, Donald Trump has made inbound manufacturing investment a central part of his economic message. In his telling, the relevant question is not where capital comes from but whether factories are built in the United States and jobs go to U.S. workers. Yet one country remains a glaring exception to that logic: China. As U.S. and Chinese trade officials prepare for talks in Paris ahead of a possible meeting between Trump and Chinese President Xi Jinping, that exception deserves scrutiny.
Trump’s openness to Chinese investment is not entirely new, despite his previous singling out of China as an economic opponent. On the campaign trail in September 2024, he said he wanted to lure factories from abroad, including from China, with low taxes and light regulation. In remarks at the Detroit Economic Club on Jan. 13, he was blunter still: “Let China come in.”
Since returning to the White House, Donald Trump has made inbound manufacturing investment a central part of his economic message. In his telling, the relevant question is not where capital comes from but whether factories are built in the United States and jobs go to U.S. workers. Yet one country remains a glaring exception to that logic: China. As U.S. and Chinese trade officials prepare for talks in Paris ahead of a possible meeting between Trump and Chinese President Xi Jinping, that exception deserves scrutiny.
Trump’s openness to Chinese investment is not entirely new, despite his previous singling out of China as an economic opponent. On the campaign trail in September 2024, he said he wanted to lure factories from abroad, including from China, with low taxes and light regulation. In remarks at the Detroit Economic Club on Jan. 13, he was blunter still: “Let China come in.”
Resistance in Washington is strong and has been entrenched for years across Congress and much of the U.S. policy system. That resistance rests on both ideological and security grounds: In much of Washington, even Chinese capital is now easily characterized as Communist Party-led, state-linked investment that could threaten U.S. national interests. In some scenarios, the questions raised are legitimate, whereas in others they are excessive, sometimes even paranoid. But the real question is whether that resistance should be treated as absolute and inflexible.
The Trump administration’s own standards suggest the possibility of a different approach. The 2026 Trade Policy Agenda says Washington should “attract constructive foreign investment” while ensuring that foreign investment does not “imperil national security.” Taken seriously, that should not mean closing the door to all Chinese investment. It should mean preserving a narrow lane for arrangements that demonstrably do not imperil national security: structures with strict governance safeguards, legal ringfencing, robust auditing, and a clear link to domestic production and employment.
The Wall Street Journal recently reported that Washington wants China to expand purchases of U.S. energy. That is an extraordinary ask at a moment of geopolitical strain and energy insecurity. But it also reveals an obvious asymmetry: The United States is comfortable with economic ties that deepen Chinese reliance on U.S. supply—yet far less willing to tolerate even tightly constrained forms of Chinese participation in the U.S. economy. A more coherent approach would apply the same principle to investment: hard lines around what is genuinely sensitive and limited space for what is not.
In some nonsensitive sectors, projects undertaken by Chinese firms with established U.S. partners may prove easier to defend politically than stand-alone Chinese ventures. Chinese companies may be more open to such arrangements than many in Washington assume because durable access to the U.S. market increasingly depends on partners that can navigate regulatory, political, and public pressures.
Those pressures are particularly intense for Chinese projects, as the Ford-CATL battery project shows. In that case, Ford’s planned Michigan battery plant was structured so that Ford would own and operate the facility while CATL would provide battery technology under a licensing arrangement rather than take an equity stake. The ring fence was designed precisely to preserve U.S. ownership, U.S. production, and U.S. jobs while allowing a U.S. company to use Chinese industrial know-how. Even so, it has remained under sustained attack from Capitol Hill. That is not a new turn in Washington thinking but the continuation of a longer pattern in which even limited, structured forms of industrial cooperation with China struggle to remain politically defensible.
Tencent’s gaming investments illustrate the point from another angle. Video games are not strategic U.S. infrastructure, but Tencent also sets limits on itself. It holds only a minority stake in Epic Games, while control remains with the developer’s well-known American founder. Epic has said it does not share user data with Tencent. U.S.-based Riot Games, which is fully owned by Tencent, has also said it operates independently and maintains its own data protections.
In 2024, after scrutiny from the U.S. Justice Department, Tencent gave up its unilateral right to appoint directors or observers to Epic’s board. A content-focused business model, minority ownership, independent local operations, and governance concessions—if such investments cannot be treated in good faith, then the problem is no longer risk mitigation but the presumption that almost any Chinese presence is unacceptable.
That pattern carries real costs. In sectors such as automobiles, batteries, industrial equipment, and parts of the broader advanced manufacturing supply chain, excluding Chinese know-how does not make industrial realities disappear. It raises costs, slows scale-up, and makes projects less attractive—if not uninvestable—to investors. Washington is entitled to draw hard lines around critical infrastructure, sensitive personal data, software control, and military spillovers. But those lines are only credible if they are precise. Once risk is defined so broadly that almost any Chinese industrial involvement is presumed unacceptable, industrial policy starts to work against itself.
The United States worries about more than ownership. In a growing number of sectors, its concerns turn on data access, remote software updates, operational dependence, and what it sees as opaque links between private Chinese companies and the state. But those concerns should lead to sharper screening, not blanket exclusion.
The right test is not whether a Chinese entity appears somewhere in the value chain but whether an arrangement gives Chinese actors control, privileged access to sensitive data, or leverage over a genuinely critical node. If the answer is no, Washington should at least ask whether the economic gains justify carefully bounded cooperation.
In sectors including industrial equipment and consumer technology, market access can imply access to data, software, networks, and other forms of continuing operational leverage. China’s Global Initiative on Data Security, part of Xi’s much-touted Global Security Initiative, does not automatically resolve U.S. distrust but offers a starting point: a pledge that governments should not force companies to store overseas data at home or obtain data in other jurisdictions without permission.
If Washington wants a more durable framework for limited investment, it should encourage Beijing to translate such language into domestic rules that are legible, enforceable, and reviewable to outsiders and to realize their value through robust implementation.
The United States cannot celebrate foreign investment, promise a manufacturing revival, and still treat almost any Chinese role as beyond the pale. If the Trump administration is serious about reindustrialization, it needs a narrower definition of risk—and a clearer distinction between what is sensitive and what is merely Chinese.
