Why allow them to have the chance of thriving when no Chinese company will have a chance of thriving in America? A line has to be drawn. What better way than by slapping spying accusations against Tesla and force selling it on national security grounds?
Why allow Tesla to thrive in China? Because it helps the Chinese EV industry. By allowing an apex predator like Tesla in, it forces Chinese companies like NIO to up their game and compete. It forces Chinese battery makers to stay on the cutting edge.
Similar things happened when iPhone was introduced to the Chinese market. Now iPhone accounts for less than 10% of smart phone sales in China.