RUTHFULLY YOURS

• “Other American CEOs have close relationships to the [Chinese Communist] Party. But [Elon] Musk is the only one who loudly praises Beijing while running a space company with incredibly sensitive and powerful defense applications.” — Isaac Stone Fish, Barron’s, November 13, 2020.
• Musk’s dilemma is not unique. The close technology-sharing relationship between Tesla and SpaceX poses national security risks to his adopted home country, but so do Google’s and Microsoft’s work with China on artificial intelligence. U.S. government policy is predictably slow in catching up to the speed of hard-charging, globe-spanning enterprises like Musk’s, and the Chinese are only too happy to increase that gap.
• At some point, however, companies such as SpaceX, Google and Microsoft, and the individual Americans who own, direct, or invest in them, will face a similar choice between their obligation to America and their pursuit of more profits abroad.

Elon Musk has fans all over the ideological spectrum. People on the Left love him for popularizing electric cars with his Tesla company, or maybe for openly smoking pot on podcaster Joe Rogan’s show. Conservatives love him for his entrepreneurial dash and penchant for standing up to politicians and Big Tech censorship of the internet. And everyone loves Musk for responding to Russia’s invasion of Ukraine and severing of its communications links by making his Starlink satellite broadband internet service available in Ukraine and donating Starlink terminals to Ukrainians. The Starlink connectivity, according to one report, may even be helping armed Ukrainian drones target Russian military vehicles.

Less is known about Musk’s business dealings in Communist China, but that might be about to change. Republicans in the House of Representatives have signaled their intention to scrutinize Musk’s business operations in China, specifically with “bleed over” between electric car manufacturer Tesla and SpaceX, whose sensitive technologies have national security implications for the United States. As the Wall Street Journal put it:

“The concerns center on the potential for China to gain access to the classified information possessed by Mr. Musk’s closely held Space Exploration Technologies Corp., including through SpaceX’s foreign suppliers that might have ties to Beijing.”

Rep. Chris Stewart, (R-UT), is pressing for confidential briefings on Capitol Hill with officials from agencies including the National Reconnaissance Office, which coordinates the launch of intelligence satellites, to determine whether the Chinese government has any direct or indirect links to SpaceX, the Journal reports.

Musk has built factories and showrooms for Tesla in China, using Chinese government-subsidized loans and capital from government-connected investors such as Tencent to do it. He has enthused about the energy and support he gets from China’s leadership, contrasting it with the “complacency and entitlement” he finds in New York and Los Angeles. He is not wrong about that — New York and California are among the worst states in the nation for doing business, and employers are fleeing in droves for more business-friendly states such as Texas, where Musk has also opened factories.

But Musk doesn’t bother to flatter U.S. state governors the way he has China’s Communist dictator, President Xi Jinping:

“It seems ironic, but even though you have sort of a single-party system, they really, actually seem to care a lot about the well-being of the people. In fact, they’re maybe even more sensitive to public opinion than what I see in the US.”

Musk’s Chinese adventures go against even some of his own policies. In the US, Musk encourages any Tesla employee to reach out directly to Musk himself with problems. In China, though, that policy was quickly shelved by the government-connected Chinese executives who Musk placed in key positions, as noted in my book, Red Handed: How American Elites are Helping China Win. Grace Tao, a former television personality for China Central Television, was brought in to head up communications and government affairs. She explained to fellow Tesla employees that she was linked to the highest levels of government and could communicate directly with President Xi through a single intermediary if she found it necessary.

Stewart, a senior member of the House Intelligence Committee, says:

“I am a fan of Elon Musk and SpaceX, but anyone would be concerned if there are financial entanglements with China… Congress doesn’t have good eyes on this.”

Commerce Secretary Gina Raimondo agrees. Her department protects the distribution of sensitive US technology, and she understands the challenges of dealing with China. “It’s certainly true that China’s coercive practices, anticompetitive practices, practices trying to steal our (intellectual property) or steal our technology and know-how are well documented,” she said.

Three years ago, Senator Cory Gardner (R-CO) proposed legislation that would require the U.S. government to determine whether Chinese entities are “leveraging United States companies that share ownership with NASA contractors.” SpaceX lobbied against similar legislative provisions in the House.

SpaceX is a company whose technology has military applications. Gardner’s point is that to sell to the Pentagon and NASA, SpaceX must remain compliant with the International Traffic in Arms Regulations (ITAR), which require weapons manufacturers to prevent their technology from being accessed by countries like China. Any leak, or forced technology transfer to China, could jeopardize SpaceX’s ITAR compliance — and with it, its relationship with U.S. government entities.

So, Musk will have some choices to make.

Isaac Stone Fish, author of America Second: How America’s Elites Are Making China Stronger, noted in 2020:

“Other American CEOs have close relationships to the [Chinese Communist] Party. But Musk is the only one who loudly praises Beijing while running a space company with incredibly sensitive and powerful defense applications. Can Musk continue to walk this line? A clearer separation between SpaceX and Tesla would help him manage the potential downsides of a spiraling U.S.-China relationship.”

Musk’s dilemma is not unique. The close technology-sharing relationship between Tesla and SpaceX poses national security risks to his adopted home country, but so do Google’s and Microsoft’s work with China on artificial intelligence. U.S. government policy is predictably slow in catching up to the speed of hard-charging, globe-spanning enterprises like Musk’s, and the Chinese are only too happy to increase that gap.

At some point, however, companies such as SpaceX, Google and Microsoft, and the individual Americans who own, direct, or invest in them, will face a similar choice between their obligation to America and their pursuit of more profits abroad.

Peter Schweizer, President of the Governmental Accountability Institute, is a Gatestone Institute Distinguished Senior Fellow and author of the new book, Red Handed: How American Elites are Helping China Win.