I really don't think this would be a "negotiation". I think it will take Congress to hammer the Chinese. They will not agree to anything we propose.
We are giving China more of what they want, empowering them even more.
Here's one example. The PRC now makes most of the high quality magnets used to make smart bombs. We closed a plant in California for environmental reasons (the Desert Tortoise) and now are shipping another plant from Indiana to China:
http://www.freerepublic.com/focus/f-news/962493/posts Archibald Cox, Jr. is on the board of this corporation.
No one can get answers from DoD, the White House or anyone.
Duncan Hunter tried to pass a bill that would require DoD to make 65% of its purchases from American companies. Rumsfeld advised Bush not to sign it. Apparently, we have become very dependent upon other nations for our defense.