SpaceX reportedly has a secret backdoor for Chinese investment

Elon Musk’s rocket company SpaceX has allowed Chinese investors to buy stakes as long as the funds are routed through the Cayman Islands or other offshore hubs, according to reporting from ProPublica. 

SpaceX is a defense contractor for the Pentagon, one that handles sensitive work like building a classified spy satellite network. Investment from China raises national security concerns, as it could grant a foreign adversary access to sensitive military technology, intelligence, or supply chains. 

The insight into SpaceX’s investment approach surfaces new questions around Musk’s own ties with China, particularly amid reports that the Pentagon briefed Musk on a potential war with China. The billionaire executive who is leading the charge to gut federal spending has regularly met with Communist Party officials in China to discuss his business interests. Tesla’s Shanghai gigafactory builds about half of Tesla’s cars, and the country makes up a significant (if shrinking) chunk of its sales.

The details of how SpaceX allows Chinese investors to buy into the company came to light through the testimony of its CFO, Bret Johnsen, and major investor Iqbaljit Kahlon during a recent corporate dispute in Delaware.

The dispute centered around an aborted 2021 deal with a Chinese firm that had planned to buy $50 million of the company’s stock. When the news became public, SpaceX executives pulled out to avoid potential problems with national security regulators. 

Kahlon testified in December that SpaceX finds it “acceptable” for Chinese investors to buy into the company through offshore vehicles, which are often used to keep investors anonymous. 

Experts who spoke to ProPublica said this practice is troubling because it’s a potential sign that the company is taking active steps to conceal foreign ownership interests. It’s unclear exactly why SpaceX does this; the company did not immediately respond to a request for comment. 

While passive, noncontrolling stakes from foreign investors are welcome, it is the Trump administration’s position that adversaries like China use concealed investment strategies to obtain technologies, IP, and leverage in strategic industries. As a result, typically such investments would be vetted by the Committee on Foreign Investment in the United States (CFIUS).

There’s no public record of SpaceX undergoing a formal CFIUS review. TechCrunch has reached out to CFIUS and SpaceX to learn more. 

ProPublica’s reporting follows an investigation from the Financial Times that found that Chinese investors are using special-purpose vehicles to quietly funnel millions into Musk-controlled companies, including SpaceX, xAI, and Neuralink.