Chinese cash flows into Musk ventures raise US security 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 are quietly placing tens of millions of dollars in Elon Musk's private companies, such as SpaceX, xAI, and Neuralink. They use special financial structures known as special-purpose vehicles (SPVs), which allow them to remain anonymous and avoid restrictions from U.S. 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 buy shares in U.S. technology and defense sector companies. Therefore, funds are placed in Cayman Islands-registered vehicles, which then invest 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 $30 million over the last two years.
Controversies over Beijing's influence
The influx of Chinese funds raises concerns, especially given Musk's access to U.S. government secret projects and his contracts with 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 himself has maintained good relations with Beijing for years. In 2019, he launched a massive Tesla factory in Shanghai, which relies on Chinese supply chains.
SpaceX, which has significantly increased its valuation in recent years, is the biggest draw for Chinese investors.
- Homaer Financial offered Chinese investors the opportunity to purchase shares in SpaceX starting from $200,000.
- It was projected that SpaceX's value would rise to $1.1 trillion within three years.
- In 2018, Chinese investors achieved a 530 percent return on their investment in SpaceX.
Despite geopolitical tensions, Chinese millionaires continue to place funds 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.
