Why Elon Musk’s takeover of Twitter could benefit China

Tesla is the first foreign automaker to open an independent factory in China, called Gigafactory 3, in 2019. (Source: Reuters)

Elon Musk and China share a mutually beneficial but complicated business relationship.

After the billionaire took over Twitter, concerns about how the Musk-China affair could benefit the country began to escalate.

For example, Tesla’s vast operations in China could complicate Musk’s plans to make Twitter a hub for free speech.

Former Amazon CEO Jeff Bezos wondered if China would lean on Musk’s Tesla business to thwart criticism of Beijing on Twitter.

These apprehensions are not entirely unfounded as it is possible that China is leveraging the business relationship with Musk to influence how it is portrayed online, of which Twitter is an important part.

Why China matters to Musk

While Twitter is banned in China, the country is key to Tesla as it is a key source of Musk’s wealth.

Tesla has become the first foreign car manufacturer open an independent factory in China, called Gigafactory 3, in 2019.

The Chinese government welcomed Tesla to Shanghai and provided Musk with cheap land, loans, tax breaks and grants worth billions of dollars.

Chinese banks loaned the company about $2.2 billion to finance the project. Tesla also got a $2.5 billion investment from Tencentone of China’s largest technology companies.

It also received significant tax breaks when setting up the Shanghai factory, which is its first overseas factory.

The company reaped lucrative profits with a quarter of revenue in 2021 coming from China.

Shanghai recently picked Tesla as one of 600 businesses that could be reopened during a COVID lockdown in the city, according to BNC News.

China is not only Tesla’s second market in terms of sales, but he is also responsible for the production of nearly half of Tesla’s vehicles.

There are fears that if China pressures Musk to filter the way he is featured on Twitter, or if the Chinese government tries to peddle its own propaganda or disinformation, then Musk could be in a tough spot.

Tesla model 3 cars.

In 2018, when the United States tightened its technology exports to China, President Xi pledged to make China the future global center of innovation and industry. (Source: Getty)

Why Musk matters to China

China’s ambitions to become the future global center of innovation and industry were turned upside down in 2018 when the United States tightened its technology exports to China.

Following the move, Chinese President Xi Jinping took a different approach and allowed foreign companies to become sole owners of auto companies, with Tesla being the first to fully own its local operations.

Elon Musk operates Tesla in China within the limits of Chinese laws and under the control of Chinese authorities.

The Chinese government has a reputation for making it difficult for companies that don’t follow its policies.

With Tesla at the helm, China’s bargaining power with Musk could be stronger and subsequently his intentions to spread information or misinformation via Twitter could grow.

Tesla, which has been favored by President Xi so far, faces an increasingly difficult business environment in China.

It has drawn ire from domestic rivals who believe Tesla has received preferential treatment.

The country has pressured foreign companies to adhere to its strict data security policy, which would require Tesla to seek permission from authorities before updating certain software on cars in China.

To earn brownie points, Musk sang the praises of China’s ruling Communist Party and it’s a weakness China could try to capitalize on unless Twitter puts in place tough rules that apply globally. which could again cripple Musk’s intention to bring “democracy to the town square”.

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About Emilie Brandow

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