US Treasury Secretary Scott Bessent told lawmakers on Thursday, 5 June that the Trump administration is actively investigating reports of continued Chinese involvement in American manufacturing projects that receive federal tax incentives, signalling deepening scrutiny of Beijing's footprint in sectors Washington regards as strategically vital.

What Triggered the Review

The disclosure came during a hearing before the House Ways and Means Committee, after lawmakers raised concerns that companies benefiting from US manufacturing tax credits may still rely on Chinese personnel and expertise despite restrictions designed to reduce American dependence on China.

Congressman Darin LaHood, a member of the House Select Committee on China, said some manufacturers continue to depend on Chinese engineers and personnel linked to the Chinese Communist Party (CCP) while operating facilities inside the United States. He argued such arrangements could undermine the core objective of transferring technological know-how and operational control to American firms.

What the Treasury Said

Bessent confirmed the department was actively monitoring the issue. “We are polling the companies. We are asking for verification that this is not happening,” he told the committee. He added: “Whenever we receive a report, we investigate it.”

When pressed on whether investigations had produced results, Bessent described oversight efforts as “very robust” and pointed to broader administration actions limiting Chinese technology in sensitive domains. He cited the Federal Communications Commission (FCC) banning Chinese drones and routers, and noted requirements that electronic systems in American vehicles not be connected to Chinese entities.

The 45X Tax Credit at the Centre of the Debate

The scrutiny centres on the 45X manufacturing tax credit, a provision designed to incentivise domestic production and fortify US supply chains in sectors critical to national and economic security. Lawmakers on both sides of the aisle have increasingly pushed for safeguards to ensure federal incentives do not indirectly benefit Chinese entities. This comes amid a broader bipartisan push to decouple American advanced manufacturing, clean energy, and telecommunications infrastructure from Chinese supply chains.

Broader Context and What It Signals

The hearing reflects a growing concern in Washington that Chinese firms and personnel could retain influence over key technologies even as companies formally establish manufacturing operations on US soil. Notably, this is not the first time the 45X credit has drawn scrutiny — earlier rounds of congressional debate flagged loopholes that could allow foreign-linked entities to claim domestic production benefits.

Both Republicans and Democrats have backed measures to reduce reliance on Chinese supply chains, particularly in advanced manufacturing, semiconductors, clean energy, and critical communications technology. The administration’s willingness to investigate suggests enforcement, not just legislation, is now a priority.

What Happens Next

The Treasury’s verification process — polling companies and investigating reports — is ongoing, according to Bessent. No specific findings or enforcement actions were announced at the hearing. Congressional pressure is expected to intensify, with the House Select Committee on China likely to push for stricter compliance mechanisms tied to the 45X credit and similar incentive programmes.