Consider whitespace that won't be emitted to be different kind so that we won't include in typ-checking

src/compiler/checker.ts

@@ -13275,7 +13275,7 @@ namespace ts {
             const parent = openingLikeElement.parent.kind === SyntaxKind.JsxElement ?
                 openingLikeElement.parent as JsxElement : undefined;
             let containsSynthesizedJsxChildren = false;
-            // Comment
+            // We have to check that openingElement of the parent is the one we are visiting as this may not be true for selfClosingElement
             if (parent && parent.openingElement === openingLikeElement && parent.children.length > 0) {
                 // Error if there is a attribute named "children" and children element.
                 // This is because children element will overwrite the value from attributes
@@ -13287,7 +13287,11 @@ namespace ts {
                 const childrenPropSymbol = createSymbol(SymbolFlags.Property | SymbolFlags.Transient, jsxChildrenPropertyName);
                 const childrenTypes: Type[] = [];
                 for (const child of (parent as JsxElement).children) {
-                    childrenTypes.push(child.kind === SyntaxKind.JsxText ? stringType : checkExpression(child));
+                    // In React, JSX text that contains only whitespaces will be ignored so we don't want to type-check that
+                    // because then type of children property will have constituent of string type.
+                    if (child.kind !== SyntaxKind.JsxTextAllWhiteSpaces) {
+                        childrenTypes.push(child.kind === SyntaxKind.JsxText ? stringType : checkExpression(child as Expression, checkMode));
+                    }
                 }
                 childrenPropSymbol.type = getUnionType(childrenTypes,  /*subtypeReduction*/ false);
                 attributesTable.set(jsxChildrenPropertyName, childrenPropSymbol);
@@ -17099,13 +17103,6 @@ namespace ts {
             return cache ? checkExpressionCached(node) : checkExpression(node);
         }
 
-        // Checks an expression and returns its type. The contextualMapper parameter serves two purposes: When
-        // contextualMapper is not undefined and not equal to the identityMapper function object it indicates that the
-        // expression is being inferentially typed (section 4.15.2 in spec) and provides the type mapper to use in
-        // conjunction with the generic contextual type. When contextualMapper is equal to the identityMapper function
-        // object, it serves as an indicator that all contained function and arrow expressions should be considered to
-        // have the wildcard function type; this form of type check is used during overload resolution to exclude
-        // contextually typed function and arrow expressions in the initial phase.
         function checkExpression(node: Expression | QualifiedName, checkMode?: CheckMode): Type {
             let type: Type;
             if (node.kind === SyntaxKind.QualifiedName) {

src/compiler/parser.ts

@@ -3825,7 +3825,7 @@ namespace ts {
         }
 
         function parseJsxText(): JsxText {
-            const node = <JsxText>createNode(SyntaxKind.JsxText, scanner.getStartPos());
+            const node = <JsxText>createNode(currentToken, scanner.getStartPos());
             currentToken = scanner.scanJsxToken();
             return finishNode(node);
         }
@@ -3833,6 +3833,7 @@ namespace ts {
         function parseJsxChild(): JsxChild {
             switch (token()) {
                 case SyntaxKind.JsxText:
+                case SyntaxKind.JsxTextAllWhiteSpaces:
                     return parseJsxText();
                 case SyntaxKind.OpenBraceToken:
                     return parseJsxExpression(/*inExpressionContext*/ false);
@@ -3862,7 +3863,10 @@ namespace ts {
                 else if (token() === SyntaxKind.ConflictMarkerTrivia) {
                     break;
                 }
-                result.push(parseJsxChild());
+                const child = parseJsxChild();
+                if (child) {
+                    result.push(child);
+                }
             }
 
             result.end = scanner.getTokenPos();

src/compiler/scanner.ts

@@ -1723,6 +1723,11 @@ namespace ts {
                 return token = SyntaxKind.OpenBraceToken;
             }
 
+            // First non-whitespace character on this line.
+            let firstNonWhitespace = 0;
+            // These initial values are special because the first line is:
+            // firstNonWhitespace = 0 to indicate that we want leading whitspace,
+
             while (pos < end) {
                 pos++;
                 char = text.charCodeAt(pos);
@@ -1736,8 +1741,22 @@ namespace ts {
                     }
                     break;
                 }
+
+                // FirstNonWhitespace is 0, then we only see whitespaces so far. If we see a linebreak, we want to ignore that whitespaces.
+                // i.e (- : whitespace)
+                //      <div>----
+                //      </div> becomes <div></div>
+                //
+                //      <div>----</div> becomes <div>----</div>
+                if (isLineBreak(char) && firstNonWhitespace === 0) {
+                    firstNonWhitespace = -1;
+                }
+                else if (!isWhiteSpaceSingleLine(char)) {
+                    firstNonWhitespace = pos;
+                }
             }
-            return token = SyntaxKind.JsxText;
+
+            return firstNonWhitespace === -1 ? SyntaxKind.JsxTextAllWhiteSpaces : SyntaxKind.JsxText;
         }
 
         // Scans a JSX identifier; these differ from normal identifiers in that

src/compiler/types.ts

@@ -65,6 +65,7 @@
         NumericLiteral,
         StringLiteral,
         JsxText,
+        JsxTextAllWhiteSpaces,
         RegularExpressionLiteral,
         NoSubstitutionTemplateLiteral,
         // Pseudo-literals