Source: Blog – Alliance for American Manufacturing

Creative Commons image by Daniel Oberhaus (2018)

A lot of people dislike the billionaire because of what he’s done to Twitter. But Musk’s increasingly close ties with China’s authoritarian government should also raise some red flags.

Billionaire Elon Musk has become a top figure in America’s never ending culture wars thanks to his purchase of the dumpster fire social media website Twitter. He’s a hero to some and a villain to others, even while it remains unclear whether he can actually pull of keeping the website up-and-running, especially for headline-making events.

But while Musk’s new regime at Twitter generates a lot of attention — and credit to Musk, it keeps the social media chatter going — here at the Alliance for American Manufacturing, we have bigger beef with the billionaire for his close ties with authoritarian governments around the globe and what it means for U.S. national and economic security.

Musk is pretty darn critical of American leaders, but he seems all too willing to do the bidding of murderous dictators like Russia’s Vladimir Putin. He also recently bowed to the will of Turkish President Recep Tayyip Erdoğan, censoring Twitter content in the midst of Turkey’s recent presidential election.

It is Musk’s closeness to Chinese Communist Party (CCP) officials that is most alarming, however.

At a time when U.S.-China relations are tense, to put it mildly — and when the United States is pursing industrial policy to reduce our dependence on China for the things we need — Musk is doubling down on China. On Tuesday, he met with the Chinese Foreign Minister, and CCP officials made a point to announce that Musk said he opposes the “decoupling” of the U.S. and Chinese economies. He even apparently told Chinese leaders that he sees the two nations as “conjoined twins.”

The Chinese government is clearly using Musk for propaganda purposes here. It’s easy to see why Musk is playing along, as he needs to stay in the good graces of the CCP to protect his bottom line. His electric vehicle company, Tesla, has a huge presence in China. Tesla’s largest manufacturing facility is in Shanghai, and the country also remains a big market for Tesla sales.

Musk isn’t the only corporate CEO to visit China in recent months, of course. Apple’s Tim Cook traveled to the country in March, for example. But Cook also is working to diversify Apple’s iPhone manufacturing and related supply chain; Apple is said to be taking steps to move production out of China, worried about the risks of having too much production in one place. Not so with Musk, who is said to now be looking to expand in China.

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There are a few main reasons why all of this is so alarming.

First and foremost are human rights concerns. Musk appears to have no qualms working with a regime that is overseeing the genocide of the Uyghur people. The CCP stands accused of using forced Uyghur labor in Xinjiang to make products for Western brands, including Tesla. While other companies have worked to move their supply chains from Xinjiang, or at the very least tried to distance themselves from what’s happening in the region, Musk has done the opposite. Just days after President Biden signed the Uyghur Forced Labor Prevention Act into law, which bans imports from Xinjiang, Musk opened a Tesla showroom there — a sign of which government he is most worried about impressing.

Second, there also are concerns about how Musk’s relationship with the CCP will impact the U.S.-China economic competition. China has made clear that it aims to dominate certain global industries, and electric vehicles are one of them. Tesla is a big part of this effort, as the company exported 13,000 EVs from its Shanghai factory in the first four months of 2023.

Meanwhile, the United States is working hard to shore up its own production of EVs via new laws like the Inflation Reduction Act. It isn’t hard to imagine the CCP aiming to flood the U.S. market with cheap Tesla EVs in an attempt to seize market share. That would threaten the U.S. auto industry, a critical part of the American economy. Musk, looking to pad his bottom line, could end up playing along.

Third, there are national security concerns. Tesla already has come under fire for spying on its customers and internally sharing videos taken from cameras in private vehicles; it isn’t hard to imagine the CCP using some of that footage for more nefarious means. Then there are data worries. China’s government actually flagged this as something they were concerned about a couple years ago, so it’s not out of the question that the U.S. government may have similar worries.

But there’s also legitimate national security concerns about Musk’s ownership of Twitter. A new report finds that since Musk took over the site, it has approved 83% more censorship requests from authoritarian governments, including in Turkey (which we mentioned above) and India. It doesn’t seem out of the question that the CCP or other regimes looking to sway say, U.S. election results, may lean on Musk to present content in a certain way (lookin’ at you, Putin).

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In many ways, it seems as if Musk is happily serving as a useful idiot for the CCP, perhaps believing he can mend relations between the two countries, all while Chinese officials use him as the vehicle for spreading their own propaganda.

Lawmakers shouldn’t buy into it, and should keep their attention on winning the U.S.-China competition.

There are a lot of steps that the United States can and should be doing to compete with China, including pursuing manufacturing policy like the CHIPS and Science Act to support the growth of our own industry. Outbound investment review to ensure the United States doesn’t just give away our technological advantages to our top strategic rival also seems appropriate.

And when it comes to Tesla specifically, the United States must remember China’s plan to dominate the EV industry involves a use of unfair trade practices like forced labor, massive government subsidies, and lax environmental laws. Tesla benefits from these bad practices. As AAM President Scott Paul noted on Twitter, this is a trade issue, and the U.S. government should take action to ensure Tesla exports don’t undermine American automakers and workers.

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One of the most disappointing things about Musk’s increasingly cozy relationship with China’s regime is that he still maintains a strong manufacturing presence in the United States (although the company’s labor practices need some improving, which is a blog for another day). Tesla was the first U.S. EV that really took off with consumers here, and that’s allowed Musk to pursue other big factory ventures, like the gigafactories in Nevada and Texas. These facilities not only will help the United States transition to a clean energy economy, but they also will be critical in our strategic competition with China.

But Musk appears to want to continue to play both sides, seeing his business grow in both the United States and China. How much longer he can play that game is unclear. The world is changing fast, and it is possible that relations between the world’s two superpowers will continue to deteriorate as the competition between them heats up. At some point in the future, Elon Musk is very likely going to have to decide where he wants to do business.

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