Chinese officials are prepared to let TikTok’s U.S. operations shut down rather than approve a forced sale, as ByteDance navigates pressure from both Beijing and Washington amid escalating trade tensions, three people familiar with the negotiations told The Washington Post.

Beijing is adopting a hardline stance, seeking a “grand deal” with the Trump administration that would include major concessions on trade and technology policy before approving any TikTok sale, one source said. 

The strategy comes as Trump has suspended enforcement of a law requiring TikTok’s divestment from Chinese ownership while he attempts to broker a deal.

ByteDance has received multiple acquisition inquiries since Congress passed legislation last year effectively mandating a sale of TikTok’s U.S. operations. Potential buyers include Microsoft, X owner Elon Musk, and a $20 billion joint offer from “Shark Tank” star Kevin O’Leary and business magnate Frank McCourt.

The company appears to have limited incentive to rush into a deal. ByteDance generated nearly $7 billion in cash during 2023’s Q1 alone, according to tech investor Rui Ma, cited by TWP. The U.S. market represents only a portion of TikTok’s global operations.

“ByteDance doesn’t need this cash, it has more cash than it knows what to do with,” Ma wrote on X. “You think it makes sense for ByteDance to sell…a copy of its most valuable [intellectual property] for cash it doesn’t need?”

Multiple Hurdles Remain

As The Washington Post notes, China has several mechanisms to block a potential sale, including data privacy rules and export controls on recommendation algorithms like TikTok’s content feed system. 

The Chinese Embassy has previously said that business acquisitions “should be independently decided by companies in accordance with market principles,” while noting that Chinese regulations must be followed when Chinese firms are involved.

Challenges exist on the U.S. side as well. Republican lawmakers have challenged Trump’s executive order extending the congressional deadline for a sale. TikTok investors may reject potential buyers or proposed valuations.

Trump has positioned himself as the key dealmaker, stating he would select a buyer within 30 days and expressing openness to various bidders including Musk. He has also suggested the U.S. government could potentially acquire TikTok through a sovereign wealth fund.

The situation impacts approximately 170 million U.S. TikTok users. The Supreme Court recently upheld Congress’s authority to mandate the app’s sale or ban, rejecting arguments about users’ free speech rights.

Bill Ford, ByteDance board member and CEO of investor General Atlantic, has indicated the company might pursue alternatives “short of divestiture.”