Elon Musk and the silent surge of Chinese investments
Chinese investors discreetly acquire stakes in Elon Musk's private companies using unique financial mechanisms that conceal their identities. While these investments are legal, they raise concerns about Beijing's influence, especially since Musk plays a pivotal role in American politics, reports the "Financial Times".
Chinese investors discreetly place tens of millions of pounds into Elon Musk's private companies, such as SpaceX, xAI, and Neuralink. They utilise unique financial structures known as special-purpose vehicles (SPVs), which allow them to remain anonymous and circumvent restrictions from US authorities.
Investments intensified after Musk became a close advisor to President Donald Trump, and his companies secured key government contracts.
Chinese capital hidden behind foreign funds
Chinese investors cannot directly acquire shares in US technology and defence sector companies. Therefore, funds are placed in Caymans Islands-registered funds, which then invest in American private equity, shareholders 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 £25 million over the last two years.
Controversies over Beijing's influence
The influx of Chinese funds raises concerns, particularly given Musk's access to US government secret projects and his execution of contracts for the Pentagon.
Derek Scissors from the American Enterprise Institute questions how someone so closely connected to China could be the right choice for reforming the U.S. government.
Musk has maintained good relations with Beijing for years. In 2019, he launched a massive Tesla factory in Shanghai, which utilises Chinese supply chains.
The allure for Chinese investors is SpaceX, which has significantly boosted its valuation in recent years.
- Homaer Financial offered Chinese investors the opportunity to purchase shares in SpaceX starting from £165,000.
- SpaceX's value was projected to rise to £900 billion within three years.
- In 2018, Chinese investors achieved a 530 per cent return on their investment in SpaceX.
Despite geopolitical tensions, Chinese millionaires continue to invest in American tech companies.
According to a New York investment manager, China's surplus of capital combined with a lack of high-quality projects creates a perfect opportunity for their business.
