Musk, who serves as a top adviser to Trump and the head of the White House’s United States DOGE Service, has extensive business operations in China. Tesla, which accounts for the bulk of Musk’s estimated $440 billion net worth, operates its largest factory in Shanghai, which produces
one million cars per year. More than
half of all Teslas produced in the last four quarters were made in the Shanghai factory. Most of the Teslas made in Shanghai are sold in China, an increasingly important market as
sales stall in Europe and
key markets in the United States like California.
Musk has secured numerous special privileges from the Chinese government. As part of the deal to form Tesla Shanghai, the Chinese government allowed Musk to operate it as a wholly owned subsidiary of Tesla rather than a joint venture with a Chinese company — something no other car company is permitted to do.
General Motors and
Volkswagen were required to negotiate arrangements with local partners before building factories in the country.
Musk
secured $521 million in loans from state-owned Chinese banks to fund the construction of the Tesla Shanghai factory. Tesla Shanghai also pays a
discounted corporate tax rate of 15%, instead of the customary 25% rate.
The Tesla Shanghai factory, according to a commentary
published by the Chinese Communist Party, is "an ideal way to convey Beijing’s position that there are no winners in trade wars and close economic ties benefit the U.S." According to the party, "[w]in-win cooperation is the right path, while closed-door exclusivity is a dead end.” The commentary implicitly underscores that Musk would be a prime target of Chinese retaliation in a trade war.
Musk is in the process of expanding his presence in China. Last year, Tesla broke ground on a $200 million battery plant in Shanghai. Musk met with Chinese Premier Li Qiang shortly before sealing the deal. Li praised Tesla as a “
successful model” of foreign investment in China. Tesla is also
waiting for "Beijing’s final approval of its latest driver-assistance technology, which Tesla calls Full Self-Driving."
In return, Musk has praised the Chinese government, saying they "
really actually seem to care a lot about the well-being of the people.” In November, the Wall Street Journal reported that Chinese leaders were hoping Musk would help “
ward off” the harsh policies proposed by Trump.
After consulting with Musk, Chinese-owned TikTok embraces pro-Trump propaganda
Last spring, Congress passed a law requiring TikTok, a Chinese company, to divest its U.S. operations by January 2025 or face a ban. The company still has not divested, and TikTok CEO Shou Zi Chew has reportedly
consulted with Musk about managing the situation.
The date of the ban coincided with Trump's inauguration. TikTok repeatedly flattered Trump, informing all of its users that the company was working closely with the then-president-elect to keep TikTok operating. TikTok briefly suspended its service — to comply with U.S. law, it said — but then restored service hours later, delivering a pop-up message to its 170 million American users: "
As a result of President Trump’s efforts, TikTok is back in the U.S.!"
Shortly after taking office, Trump, who initially proposed banning TikTok in 2020, signed an
executive order pausing the ban for 75 days and providing immunity to technology companies that help TikTok operate in the U.S.
Since then, Trump has downplayed any national security concerns related to TikTok. "Is it that important for China to be spying on young people watching crazy videos?”
Trump said last week during his interview with Hannity. “Remember, they make telephones in China. They make all sorts of things in China. Nobody ever complains about that here.”
Trump said he would support
Musk purchasing TikTok to resolve the issue. But, according to
a Saturday report from NPR, Oracle has the inside track on being the lead U.S. investor.
