Elon Musk's SpaceX is allowing Chinese investors to buy shares through offshore jurisdictions like the Cayman Islands, according to ProPublica. This is concerning because SpaceX is a Pentagon contractor and is involved in the development of classified defense technologies, including spy satellites.
Investment from China could give foreign competitors access to critical military technology and supply chains. It also raises questions about Musk’s ties to the Chinese government, as he has met with Communist Party officials on several occasions to discuss business interests. For example, Tesla’s Shanghai factory produces nearly half of all of its cars, and China remains a key market for Tesla.
Details of the Chinese investment in SpaceX emerged during a corporate lawsuit in Delaware. The company's CFO Bret Johnsen and lead investor Iqbaljit Kahlon confirmed that SpaceX considers it acceptable for Chinese investment to come through offshore funds.
In 2021, the Chinese company planned to buy $50 million in SpaceX shares, but the company’s management backed out of the deal due to potential national security concerns. Despite this, SpaceX is likely continuing to receive Chinese funds through indirect schemes.
Experts say the practice is worrisome because it could be a way to hide foreign ownership. The Trump administration has previously warned that China is using similar schemes to gain access to strategic U.S. technology. Such investments are typically subject to scrutiny by the Committee on Foreign Investment in the United States (CFIUS), but there is no evidence that SpaceX has been subject to such scrutiny.
ProPublica's investigation confirms data from the Financial Times, which found that Chinese investors are using special companies to fund not only SpaceX, but also Musk's other projects, including xAI and Neuralink.