Elon Musk may be China’s most popular American. The obstreperous entrepreneur landed in Beijing on Tuesday for his first visit to the country since 2020 and was immediately ushered into a meeting with Foreign Minister Qin Gang. With foreign capitalists questioning the country’s investability, the central government has cause to telegraph its gratitude. Musk has given the Chinese Communist Party everything it could have reasonably expected, and more.
Musk’s decision to build the world’s largest Tesla (TSLA.O) factory in Shanghai in 2019 was crucial to developing the country’s robust electric-vehicle supply chain. The massive plant can produce more than 750,000 cars a year, equivalent to over 10% of the nation’s total new energy-vehicle sales in 2022. The suppliers that sprung up to serve the Gigafactory support homegrown marques now, helping China overtake Japan to become the world’s top automobile exporter in the first quarter. More competition has diluted Tesla’s market share, but its China sales have consistently grown at triple-digit rates, touching $18 billion in 2022 up from $3 billion in 2019 – 22% of the company’s total revenue. The People’s Republic is the top market for Tesla’s Model Y, helping it become the world’s top-selling vehicle.
Worries that Musk’s $44 billion acquisition of Twitter, which had previously gone aggressively after Beijing’s army of propaganda bots, might damage Tesla’s position in China were misplaced. In fact, the opposite seems more likely. Musk has halted the practice of flagging Chinese state-affiliated media, and his “absolute” support for free speech appears limited to countries where such rights are well-defended already. He has been more inclined to comply with requests to silence opposition party critics inside countries like India and Turkey, citing his need to obey local laws. This is an encouraging precedent for the CCP. Article 38 of Hong Kong’s national security law, which criminalises behaviour that “induces hatred” toward the central government, specifies that it applies to everyone, everywhere.
Finally, Tesla’s success in China is useful for officials battling the narrative that investing in the People’s Republic has become too risky under President Xi Jinping, especially for foreign firms with valuable technology. State media quoted Musk saying the United States and China share “inseparable” interests and that Tesla opposes decoupling.
This all provides the $638 billion Tesla with good political cover in the world’s largest automobile market. There are risks, however. Musk’s cosiness with Beijing could cause problems in Washington, where his SpaceX venture has government contracts. But for now Beijing and Musk are getting what they want out of the arrangement, and that means it is likely to endure.
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(The authors are Reuters Breakingviews columnists. The opinions expressed are their own.)
CONTEXT NEWS
Tesla Chief Executive Elon Musk visited China on May 30 for the first time since 2020. He met Foreign Minister Qin Gang just hours after landing in Beijing, Reuters reported.
His trip marks the latest return by a top U.S. CEO to China since the country reopened its borders and reversed its zero-Covid policy in December. Apple's Tim Cook visited in March, while JPMorgan's Jamie Dimon and Starbucks' Laxman Narasimhan are also in China this week.
