By Yoko Kubota in Beijing and Raffaele Huang in Singapore
Elon Musk has showed off a Tesla to China's premier inside Beijing's walled leadership compound and dined with Donald Trump at Mar-a-Lago.
If there is anyone with the connections to work things out between the world's two feuding superpowers, it just might be Musk -- or so many in Beijing are hoping.
Chinese leaders enjoy some leverage over the Tesla chief executive, who has poured billions of dollars into investments in Shanghai. He has said Chinese leaders "really actually seem to care a lot about the well-being of the people."
That contrasts with the many China hawks in Trump's orbit including Treasury secretary nominee Scott Bessent, who recently called Beijing a "despotic regime" that needs to be hit with high tariffs to protect American jobs.
In China, Musk is a symbol of the American dream and of U.S. technological prowess. Even Musk's 76-year-old mother, Maye Musk, boasts celebrity status.
"Given his investment in China and also given his relations with Chinese leaders, people do hope that he can play a constructive role in the second Trump administration," said Wu Xinbo, director of the Center for American Studies at Fudan University.
The uncertainties surrounding the idea are many, starting with whether Musk would be interested in serving as go-between and whether Trump and others in his cabinet want him involved in China policy. And if Trump is determined to impose high tariffs on Chinese goods, as he has suggested, there may be nothing to talk about.
Yet in Beijing, another view prevails, perhaps with a touch of wishful thinking, that Trump and Musk are pragmatic CEOs ready to negotiate.
Trump "has this business instinct and wants to make deals," said Wang Huiyao, president of the Beijing-based think tank the Center for China and Globalization. For that reason, Wang said, Trump would want to tap business executives such as Musk to deal with China.
In eyeing Musk, Beijing is returning to an old playbook. American CEOs, especially from Wall Street, long acted in the go-between role because they had clout in Washington and hoped to expand in China. Today, with many U.S. banks and other companies abandoning the idea of China as a growth market, Musk is one of the few options left.
A major donor to Trump, Musk was named as co-head of a group to streamline government bureaucracy and has been advising the president-elect on a range of issues -- although Trump went against Musk's preference for Treasury secretary.
For Tesla, China is crucial. Tesla's Shanghai plant is the company's biggest car factory, and half its cars globally were made there in the past four quarters. During that period, Tesla sold more than 900,000 China-made vehicles, nearly one-third of which were shipped to Europe and other overseas markets.
And Tesla is awaiting Beijing's final approval of its latest driver-assistance technology, which Tesla calls Full Self-Driving. Musk says the value of Tesla lies primarily in its plans for autonomous driving, and the company has said it expects approval in the first quarter of next year.
In a conversation with Mathias Döpfner, head of German media group Axel Springer, that was published in December 2020 at the end of Trump's first term, Musk disputed Döpfner's assertion that everything China's government does serves the well-being of the Communist Party.
"My experience with the government of China is that they actually are very responsive to the people, in fact, possibly more responsive to the happiness of people than in the U.S.," Musk said.
The Musk-China relationship isn't a one-way street. Beijing has a stake in Tesla's success, giving Musk his own leverage, because it has depicted the company as a symbol of its openness to foreign investment and the Shanghai plant as a highlight of President Xi Jinping's economic policies.
Tesla's leadership in autonomous-driving technology also provides China an incentive to keep the company in the country because its presence can spur advances by domestic competitors to match and exceed their U.S. rival.
In mid-November, the Communist Party's mouthpiece, People's Daily, published a commentary praising the success of Tesla's Shanghai factory. Without mentioning Musk by name, it suggested Tesla's story would be an ideal way to convey Beijing's position that there are no winners in trade wars and close economic ties benefit the U.S.
"Win-win cooperation is the right path, while closed-door exclusivity is a dead end," the commentary said.
In 2019, Musk took a Tesla inside Beijing's tightly guarded Zhongnanhai leadership compound for a meeting with then-Premier Li Keqiang. When Musk told Li that he loved China and wanted to visit more, the premier offered him a Chinese green card.
Most notable is Musk's relationship with the current premier, Li Qiang, the country's No. 2 leader.
In 2018, Musk visited Shanghai, where Li Qiang then served as Communist Party secretary, to sign a deal for Tesla to build a $7 billion plant in the city -- its first overseas plant.
Tesla was permitted to assume sole ownership of the factory, the first such case after decades in which China required foreign automakers to form joint ventures with local companies. Under Li's watch, the Tesla project started production within a year after its groundbreaking.
With Tesla's arrival, China's EV market took off in 2020. Tesla's moderately priced, made-in-China EVs ignited demand for electric cars among Chinese consumers. The EV supply chain developed quickly and contributed to the rise of domestic EV makers -- to the point of threatening Tesla with competition these days.
Chinese state media have reported that Tesla will be among the first foreign companies that China will allow to fully own and operate telecom services. State media also said officials have expressed interest in Musk's Neuralink brain-reading implant technology.
Musk was back in Beijing in April to see Li. The premier called the CEO an "old friend" and Musk's then 3-year-old son "a handsome little boy."
Feng Chucheng, founding partner of Beijing advisory firm Hutong Research, said China would surely want to take advantage of the relationship -- but there was also a risk.
The value of the ties, said Feng, "will heavily depend on whether and how long Musk remains on positive terms with Trump, whose inner circle is fiercely competitive."
Write to Yoko Kubota at yoko.kubota@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
(END) Dow Jones Newswires
November 23, 2024 21:00 ET (02:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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