Will Trump Remove Security Curbs To Boost China Trade Deals?

China is pressing the Trump Administration to dismantle national security barriers blocking Chinese investments in the US, proposing a sweeping $1 trillion-plus package to reshape a decade of strained bilateral ties. President Xi Jinping's negotiators, during last month's trade talks in Madrid, also demanded reduced tariffs on imported components for Chinese-built factories on American soil, alongside a softer US stance on Taiwan.

These overtures, floated amid a framework agreement to sustain TikTok's US operations, signal Beijing's aggressive bid to revive economic inflows, though US officials remain cautious, prioritising national interests amid espionage fears. The proposals come ahead of a planned Trump-Xi summit in South Korea later this month, where investment details could crystallise.

The demands mark a departure from Trump's first-term focus on Chinese purchases of US goods, shifting toward easing scrutiny by the Committee on Foreign Investment in the US (CFIUS). Senior Chinese trade envoy Li Chenggang noted Washington's "willingness" to lower investment hurdles during Madrid discussions, while Xi urged Trump in a recent call to foster opportunities for Chinese firms.

US Trade Representative Jamieson Greer confirmed talks on the US investment climate for Chinese companies, but a White House spokesperson emphasised enforcing the Phase 1 trade deal from 2020. Chinese Embassy spokesman Liu Pengyu echoed calls for mutual implementation of head-of-state understandings. The floated $1 trillion figure—dwarfing the EU's $600 billion four-year pledge or Japan's $550 billion fund—remains fluid, with structures like joint ventures potentially mitigating security risks, as suggested by Gavekal Technologies' Laila Khawaja.

US-China economic friction has throttled investments, plummeting from a 2016 peak of $57 billion to $2.1 billion in the first half of 2025, hampered by Beijing's capital controls and Washington's blocks on sensitive deals. Notable CFIUS interventions include derailing Ant Group's MoneyGram bid, forcing the sale of Grindr to US owners, and evicting a Chinese crypto miner from land near a military base. Trump's February America First Investment Policy memorandum decried Chinese acquisitions as theft of technology and leverage in key sectors.

This push aligns with Trump's second-term strategy, boasting $17 trillion in global commitments since January, but contrasts with his campaign rhetoric on rebalancing ties. The TikTok deal—ceding US control to American entities—serves as a potential blueprint for broader access.

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The overtures carry profound risks and rewards. For China, unlocking US markets could alleviate domestic slowdowns, slashing costs and creating jobs for firms hit by export curbs on green tech. However, critics like Rep. John Moolenaar warn of Beijing's history of "cheating" on deals, while former Deputy National Security Adviser Matt Pottinger likened eased curbs to America joining China's $1 trillion Belt and Road Initiative as its "final destination". State-level restrictions in over 20 US jurisdictions could further complicate inflows.

As talks evolve, the proposals test Trump's deal-making ethos against bipartisan security hawks, potentially reshaping global supply chains in an era where US-China trade volumes exceed $700 billion annually, per 2024 Census Bureau data.

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