SpaceX’s Investment Ties with China Raise National Security Concerns

New updates have been reported about SpaceX (PC:SPXEX)

SpaceX, led by Elon Musk, has reportedly allowed Chinese investors to acquire stakes in the company through offshore entities like those in the Cayman Islands, according to ProPublica. This development is significant given SpaceX’s role as a defense contractor for the Pentagon, involved in sensitive projects such as classified spy satellite networks. The involvement of Chinese investors could pose national security risks by potentially granting access to critical military technologies and intelligence. The practice of using offshore vehicles to facilitate these investments was revealed during a corporate dispute in Delaware, involving SpaceX’s CFO Bret Johnsen and major investor Iqbaljit Kahlon. The dispute highlighted a 2021 aborted deal where a Chinese firm intended to purchase $50 million in SpaceX stock, which was later canceled to avoid scrutiny from national security regulators.

Experts have expressed concerns over SpaceX’s approach, suggesting it may be an attempt to obscure foreign ownership interests. While passive, noncontrolling stakes from foreign investors are generally accepted, the U.S. government typically scrutinizes such investments, especially from adversarial nations like China, through the Committee on Foreign Investment in the United States (CFIUS). However, there is no public record of SpaceX undergoing a formal CFIUS review. This situation raises questions about the company’s investment strategies and Musk’s ties with China, especially as the Pentagon has reportedly briefed him on potential conflicts involving the country. The broader implications for SpaceX’s strategic direction and compliance with national security regulations remain under scrutiny.