China's discreet stake in Elon Musk's empire raises alarms
Chinese investors secretly acquire stakes in Elon Musk's private companies using unique financial mechanisms that hide their identities. Although legal, these investments raise concerns about Beijing's influence, especially since Musk plays a crucial role in American politics, reports the Financial Times.
Chinese investors stealthily place tens of millions of dollars into Elon Musk's private companies, such as SpaceX, xAI, and Neuralink. They employ unique financial structures known as special-purpose vehicles (SPVs), which allow them to remain anonymous and circumvent restrictions from U.S. authorities.
Investments intensified after Musk became a close adviser to President Donald Trump, and his companies secured key government contracts.
Chinese capital hidden behind foreign funds
Chinese investors cannot directly buy shares in U.S. technology and defence sector companies. Thus, funds are placed in Cayman Islands-registered funds, which are then invested in American private equity that holds shares in Musk's companies.
Sources disclosed to the Financial Times that asset managers reassure investors these structures allow them to bypass scrutiny.
According to experts, Chinese capital in Musk's companies amounts to at least $40 million over the last two years.
Controversies over Beijing's influence
The influx of Chinese funds raises concerns, particularly since Musk has access to U.S. government secret projects and handles Pentagon contracts.
How can someone with such strong ties to China be the right person to reform the American government? asks Derek Scissors from the American Enterprise Institute.
Musk himself has maintained good relations with Beijing for years. In 2019, he launched a massive Tesla factory in Shanghai, which utilizes Chinese supply chains.
The biggest attraction for Chinese investors is SpaceX, which has significantly increased its valuation in recent years.
- Homaer Financial offered Chinese investors the opportunity to purchase shares in SpaceX starting from $270,000 CAD.
- SpaceX's value was projected to rise to $1.5 trillion CAD within three years.
- In 2018, Chinese investors achieved a 530 percent return on their investment in SpaceX.
Chinese millionaires continue to place funds in American tech companies despite geopolitical tensions.
China has an oversupply of capital and a shortage of high-quality projects. That's our niche, says an investment manager from New York.
