The Financial Times considered Elon Musk, CEO of Tesla, a central and controversial figure in relations between the United States and China.
As Donald Trump resumes a second presidential term surrounded by anti-China hawks like Marco Rubio and Michael Waltz, Musk finds himself in an awkward position as his huge business interests in China intersect with hard-line US policies against Beijing.
Shanghai factory as the fulcrum
Tesla’s factory in Shanghai is the largest within the company’s global network of factories, and is responsible for producing millions of cars annually, according to the newspaper. The factory also forms an important part of export operations, as Tesla’s revenues from its operations in China alone amounted to about $54 billion over the past three years, representing 23% of its total global sales.
The factory received significant support from the Chinese government, including low-interest loans worth $1.4 billion from state banks such as the China Construction Bank, the Agricultural Bank of China, and the Industrial and Commercial Bank of China.
In addition, the factory received government subsidies amounting to $76 million from the Shanghai city government in 2022. The land on which the factory was built was leased from the Shanghai government for a period of 50 years at a discounted price of RMB 973 million ($145 million), which is less From market prices, as the newspaper reported.
Political and economic influence
According to the Financial Times, Musk has strong relations with the Chinese leadership, having met Chinese President Xi Jinping at least twice. He also managed to convince Chinese Communist Party leaders to allow his company to fully own its business in China, an unprecedented exception in the auto industry.
This decision helped Tesla strengthen its position in the Chinese market and make it a pillar in Beijing’s strategy to promote the electric car industry.
Challenges for Musk
With the Trump administration preparing to impose tariffs of up to 60% on Chinese imports, Tesla faces major challenges. These tariffs may directly affect the company’s Chinese operations, especially since 90% of the Shanghai factory’s suppliers are Chinese.
According to estimates from Goldman Sachs, these suppliers even follow Tesla to its factories abroad, increasing the company’s exposure to any changes in trade policies.
National security matters
Musk’s other projects, such as SpaceX, are a source of concern to military officials in Beijing, according to the newspaper. According to an analysis from a Chinese People’s Liberation Army research institute, SpaceX’s network of satellites, known as Star Shield, could be used for space attacks or carry weapons, making them a threat to the space security of other countries.
In previous statements, Musk indicated the possibility of a military conflict between China and Taiwan, which would increase political complications.
Efforts to ease Tesla’s dependence on suppliers in Taiwan also show Musk’s awareness of growing tensions, as he described the relationship between Taiwan and China as similar to the relationship between Ukraine and Russia, anticipating that China would seek to control Taiwan by force in the future.
Despite his claim to be an “absolute defender of freedom of expression,” Musk faces criticism over his tolerance for Chinese censorship. According to a Financial Times analysis, his significant investments in China may make him vulnerable to political pressure from the Chinese Communist Party, raising concerns about his commitment to the principles of freedom of expression and privacy.
Future impact
Musk remains a “trump card” in US-China relations, as his business interests play a pivotal role in shaping these relations.
The newspaper indicates that if tensions continue, China may find in Musk a potential ally to mitigate hard-line American policies, but this role will not be without risks, especially in light of mounting criticism within Washington regarding his relations with China.
