Elon Musk’s business ties to China are creating unease in Washington

Elon Musk’s ties to China are causing unease in Washington, including among some Republican lawmakers who have been among the billionaire entrepreneur’s ardent supporters.

Concerns center on China’s ability to access classified information held by Musk’s closely owned Space Exploration Technologies Corp., including through foreign SpaceX suppliers who may have ties to Beijing.

Some lawmakers are also troubled by the lack of clear lines between SpaceX and automaker Tesla Inc., which is also run by Mr. Musk and has extensive operations in China. Tesla has developed advanced battery packs sought after by the Chinese, and China has embraced cheaper battery technology championed by Mr. Musk.

The concerns come amid a fierce rivalry between the United States and China that has recently been stoked by China’s emphasis on space technology. Tensions are also rising over Chinese President Xi Jinping’s partnership with Russian President Vladimir Putin.

Rep. Chris Stewart (R., Utah), is seeking classified information on Capitol Hill with officials from agencies such as the National Reconnaissance Office, which coordinates the launch of intelligence satellites, to determine whether the Chinese government has direct or indirect links with SpaceX. .

“I’m a fan of Elon Musk and SpaceX, but everyone would be concerned if there were financial entanglements with China,” said Mr. Stewart, a senior member of the House Intelligence Committee. “Congress doesn’t see much to it.”

Representatives for Mr. Musk, SpaceX and Tesla did not respond to requests for comment.

Mr. Stewart also wants to know if companies with ties to China have invested in SpaceX, which is not publicly traded.

Tesla is a public company, and in 2017 Chinese tech giant Tencent Holdings Ltd. revealed that it bought 5% of the automaker’s shares. Mr Musk said it was more than just an investment: when announcing the development, he tweeted that he was “pleased to have Tencent as an investor and adviser to Tesla”.

Tencent disclosed in 2018 that its stake had fallen to 4.97%, with no further disclosure since. When asked if Tencent still owns Tesla shares, a Tencent representative said he couldn’t provide any information.

Tencent owns the WeChat messaging app that former President Donald Trump sought to ban in the United States, and which is still under security review by the Biden administration.

China is one of Tesla’s biggest markets, thanks in large part to support from the Communist Party of China and Mr. Xi. Chinese authorities have given Mr. Musk low-interest loans, cheap land and other incentives for a Shanghai facility that opened in 2019 where Tesla vehicles and batteries are assembled.

In 2018 and early 2019, Tesla was facing financial problems as its US manufacturing plant was not producing enough cars to meet expectations and the company was running out of funds.

In 2019 and 2020, Tesla received two loans from Chinese banks, according to the company’s 2021 annual report, including a $1.4 billion facility to help build its factory in Shanghai. Last year, Tesla repaid $614 million it owed the banks under the agreements and terminated both facilities, the company said.

The White House declined to comment on the potential security risks of Mr. Musk’s ties to China.

Commerce Secretary Gina Raimondo, whose department shares responsibility for safeguarding American technology, said American companies needed to be extra careful in their dealings with China.

“It is certainly true that China’s coercive practices, anti-competitive practices, practices aimed at stealing our intellectual property or stealing our technology and our know-how are well documented,” she said. Hope would never engage in behavior that puts our national security at risk.”

The Chinese Embassy did not respond to a request for comment.

Sen. Marco Rubio (R., Fla.), the top Republican on the Senate Intelligence Committee, introduced a bill in December to address the threat of China gaining access to space technology secrets through third parties.

The bill would prevent the National Aeronautics and Space Administration and other US government agencies from awarding contracts to companies with suppliers that have ties to China, and would require greater disclosure of Chinese investments in US companies. involved in the private space launch industry.

“Any company operating in China will be pressured and exploited by the Chinese Communist Party,” Mr. Rubio said in a statement to The Wall Street Journal, referring to Mr. Musk’s Tesla operations in China.

Mr. Rubio is a top recipient of Mr. Musk’s campaign donations, and Florida is home to several launch facilities, including NASA’s Kennedy Space Center, which SpaceX uses.

Concerns about potential security risks have been heightened by Mr. Musk’s praise for China, lawmakers said. As well as being seen as a security threat, China has aligned itself with Russia and has been accused of oppressing Uyghur minorities in its remote Xinjiang region, a charge Beijing disputes.

On Dec. 31, Mr. Musk opened a showroom in Xinjiang’s capital, Urumqi, just weeks after President Biden signed a bill approved by Congress to require U.S. companies that import products from Xinjiang to prove that they were not made with force. labor.

“Nationless companies are helping the Chinese Communist Party cover up genocide and slave labor in the region,” read a tweet from Mr. Rubio’s Senate office, responding to Mr. Musk’s decision.

Earlier this month, Musk hosted Chinese Ambassador to the United States Qin Gang at Tesla’s factory in Fremont, California. in the sky, research of the human brain, meaning of life on earth and our future in space.”

On the 100th anniversary of the Communist Party of China last year, Mr. Musk tweeted that “the economic prosperity China has achieved is truly amazing, especially in infrastructure!”

“China is rocking in my opinion,” Mr. Musk said in a July 2020 Automotive News podcast. “People there – there are a lot of smart, hard-working people…as I see the United States becoming more and more complacent and righteous.”

Former Republican Senator Cory Gardner of Colorado called the comments “a tone deaf to legitimate national security concerns of members of Congress.”

In 2019, Mr. Gardner attempted to add a provision to NASA-related legislation that would have required the space agency to determine whether SpaceX or other U.S. space launch companies had financial ties to Chinese companies and under foreign control.

After members of the Senate Commerce Committee agreed to include Mr. Gardner’s provision, SpaceX lobbyists worked to defeat the bill, Mr. Gardner said.

“We had heard through the grapevine that it was SpaceX, but we never heard from them directly,” said Mr. Gardner, who lost his re-election campaign in 2020.

Several Democrats on the Senate Intelligence Committee are also suspicious of Mr. Musk’s ties to China and are monitoring his movements, according to a committee aide.

Like Republicans, Democrats have mixed views on Mr. Musk. Many Democrats praise him for sparking enthusiasm for electric vehicles and championing climate change efforts. At the same time, Tesla uses a non-union workforce, which displeases Mr. Biden and other pro-union Democrats. Tesla is the world’s largest maker of electric vehicles, but Mr. Musk was not among the auto executives invited to the White House last year for an event aimed at rallying support for the industry.

Many Republicans, meanwhile, remain fans of Mr. Musk for challenging federal regulators on certain issues, and they have praised him for creating competition in the space launch industry.

“Tesla and SpaceX are great American companies. And Elon is one of our country’s greatest innovators and a true patriot,” said Matt Sparks, spokesman for House Minority Leader Kevin McCarthy’s representative ( R., Calif.), an early advocate for Mr. Musk.

“There is absolutely nothing to suggest forced technology transfers of any kind, either at Tesla or SpaceX,” Sparks said.

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