Why did Musk visit China?


Aly Song / Reuters

The biggest American businessman with political ambitions visited the Celestial Empire for the first time in three years.

Restrictions related to COVID-19 and the ongoing economic and sanctions war between the U.S. and China prevented the visit, although China is the main source of profits for Musk. The American businessman arrived as the CEO of Tesla, and officially the purpose of the visit was his business interests. This is logical, since more than half of all cars of this brand are produced in China at Tesla plants, which is more than 726 thousand units last year. Most of them are sold here in China, as well as in Asian countries. China also produces the main components of these electric cars – batteries, without which Tesla and other electric cars will become a useless pile of metal. The Chinese are world leaders in this area, not only in production, but also in development. It is no coincidence that Musk met in China with the management of Contemporary Amperex Technology (CATL) – the largest Chinese and global manufacturer of fuel cells, lithium-ion, lithium-iron-phosphate, and lithium-polymer batteries, which control more than half of the global market.

Tesla seems to be doing well in China, the plants are increasing production and sales are growing. In fact, the situation is not easy, as evidenced by the second price increase for Tesla this year. This is due to the fierce competition from Chinese manufacturers of electric cars and hybrids. Musk would like to launch another Tesla plant in Shanghai, but not everything goes well there either. Musk met with Chen Jining, Secretary of the Communist Party Committee of Shanghai, about this issue. In addition, last year, Chinese authorities suspected Tesla cars, equipped with many sensors and video cameras, of spying. And they restricted these cars from entering government districts in Beijing.

And then another problem arose. In terms of output and technology, Tesla has been overtaken by the world leader in the field of electric vehicles, the Chinese super concern BYD, which last year produced 1.86 million electric cars and hybrids and completely abandoned cars powered by internal combustion engines (something that is a dream in Europe). By the way, BYD is connected to another American billionaire, Warren Buffett.

As we remember, Musk bought Twitter (banned in Russia) by chance, and now he is thinking about how to monetize it. Without the Chinese market, it seems impossible to do this, and Twitter is not available there either. The Chinese are by no means banning foreign social networks, but they demand compliance with local laws, which Americans, such as Google, are not willing to do. And this was also the subject of Musk's negotiations in China.

Earlier it was reported that Twitter could be completely blocked in Europe from August 25 this year, when the "Law on Digital Services" will come into force there. The French Minister of Digital Technology, Jean-Noël Barrot, drew attention to the fact that Twitter under Musk refused to follow the "Voluntary Rulebook" – a collection of advisory rules, which very soon will become mandatory. The official said that if the administration of the social network does not comply with the new law, the platform will be completely blocked on the territory of the European Union.

However, it is clear that Musk's visit to China went far beyond the usual visit of an oligarch to the country of his vested interests. Elon Musk was received at a higher level than, for example, the head of Apple, Tim Cook, or the heads of JPMorgan and Starbucks, Jamie Dimon and Laxman Narasimhan. Tesla's CEO received the attention of three Chinese ministers at once – foreign affairs, commerce, as well as industry and information technology of the PRC. What is this about?

One can assume that Musk is seen in China as a sane negotiator, not so tied to confrontational neocons, and they want to use his interest to convey the Chinese leadership's views on the prospects for Sino-US relations in general to the American elite. Or to the part of it that is not in the mood for war. Since Nancy Pelosi's memorable visit to Taiwan and the U.S. administration's clearly unfriendly attacks, Beijing has refused to have high-level political contacts at all, despite Washington's best efforts to initiate them. In the context of the U.S. sanctions and trade war, the Chinese have cut off communication channels even in the military sphere. Not so long ago, in Singapore, Chinese Defense Minister Li Shangfu (who, incidentally, is under U.S. sanctions "for friendship" with Russia) defiantly refused to meet with his American counterpart Austin, even "on the margins" of the Asian security summit there. There are no attempts to resume preparations for Secretary Blinken's visit to the PRC, which the Americans themselves "postponed" because of the appearance of a Chinese hot air balloon in the skies over America. Despite the Western media speculation, there are no concrete details about visits to China by other senior U.S. officials. What to talk about when there is nothing to talk about, the Chinese explain. First, they say, stop the aggression, keep your hands off of Taiwan, stop the sanctions war, and then we'll talk.

In a conversation with Musk, Chinese Foreign Minister Qin Gang emphasized China's willingness to "steadily promote high-level openness to create a market-oriented, international business environment for companies from around the world, including Tesla. Using Musk's familiar auto vocabulary and China's favorite figurative language, the Chinese foreign minister called for "steering the wheel" of Sino-US relations so as to move toward mutual respect and mutually beneficial cooperation.

"Using the Tesla [electric car] as an analogy for the proper development of Sino-US relations, it is necessary to keep the wheel so as to move toward mutual respect, peaceful coexistence and mutually beneficial cooperation," his words were quoted by the Chinese foreign ministry's website.

Qin Gang also urged in building the Sino-US relationship to "step on the brakes in a timely manner," avoid "dangerous driving," and be able to "step on the gas" to foster mutually beneficial cooperation.

And Mao Ning, spokeswoman for the Chinese Foreign Ministry, invited other international business representatives to visit China as well, "so that a proper understanding of China and the benefits of cooperation with it can emerge." She said Beijing encourages foreign investors to increase activities in China, explore Chinese markets and share profits from China's development.

Musk, for his part, was cautious against the "disconnection and severing of ties" and expressed his willingness to continue and expand his business in China. "The interests of the U.S. and China are intertwined like Siamese twins, they are inseparable from each other," Tesla noted in the announcement. Of course: a breakup between the PRC and the U.S. would mean the collapse of Elon's empire.

Earlier Musk spoke in favor of the peaceful return of Taiwan to the motherland, however, the satellites of the Starlink system – Musk's brainchild – operate on the island (as in Ukraine), and this worries the Chinese. Surely Beijing has explained to Musk the principal position: they do not want confrontation, but they are not afraid of it. China is already surpassing the U.S. in many areas and on many parameters and is becoming self-sufficient. If official Washington does not heed this and does not put the brakes on, China will, in the foreseeable future, import-substitute the United States as a whole. The volume of the Chinese market, together with the partners in the One Belt and One Road, as well as BRICS and others, makes it possible to do so.

Will Musk be able and willing to counter the prevailing anti-Chinese rhetoric and moods in the U.S. and assemble a "peace party," time will tell.