Cherry-pick PR microsoft#38525 into release-3.9

Component commits:
19624fa Fix build type error

src/harness/vfsUtil.ts

@@ -649,14 +649,14 @@ namespace vfs {
          *
          * NOTE: do not rename this method as it is intended to align with the same named export of the "fs" module.
          */
-        public readFileSync(path: string, encoding: string): string;
+        public readFileSync(path: string, encoding: BufferEncoding): string;
         /**
          * Read from a file.
          *
          * NOTE: do not rename this method as it is intended to align with the same named export of the "fs" module.
          */
-        public readFileSync(path: string, encoding?: string | null): string | Buffer;
-        public readFileSync(path: string, encoding: string | null = null) { // eslint-disable-line no-null/no-null
+        public readFileSync(path: string, encoding?: BufferEncoding | null): string | Buffer;
+        public readFileSync(path: string, encoding: BufferEncoding | null = null) { // eslint-disable-line no-null/no-null
             const { node } = this._walk(this._resolve(path));
             if (!node) throw createIOError("ENOENT");
             if (isDirectory(node)) throw createIOError("EISDIR");