SpaceX reportedly has a secret backdoor for Chinese investment

Tech Crunch - Mar 26th, 2025

Elon Musk's SpaceX, a crucial defense contractor for the Pentagon, has permitted Chinese investors to acquire stakes in the company by channeling funds through offshore hubs like the Cayman Islands. This revelation, reported by ProPublica, raises alarm over national security due to the sensitive nature of SpaceX's work on classified military projects. The details emerged from testimony by SpaceX’s CFO, Bret Johnsen, and investor Iqbaljit Kahlon during a legal dispute, which involved a halted $50 million investment deal with a Chinese company. Concerns revolve around potential foreign access to critical technology and intelligence, with implications that SpaceX might be actively concealing foreign ownership interests.

The situation is compounded by Musk's ties with China, as he frequently engages with Chinese officials concerning his business ventures, including Tesla's significant operations in Shanghai. While SpaceX's stance on accepting foreign investments through offshore vehicles raises questions about transparency and oversight, the lack of a formal CFIUS review process adds to the controversy. This development follows other reports of Chinese investments in Musk's companies via special-purpose vehicles, which could potentially lead to strategic vulnerabilities in sensitive industries. The implications of these investment practices are significant, as they could affect national security and economic interests, prompting further scrutiny from regulators and policymakers.

Elon Musk Space X Pentagon Tesla Cfius National Security Chinese Investment Offshore Finance Pro Publica

Story submitted by Fairstory

RATING

6.6

Fair Story

Consider it well-founded

The article provides a timely and relevant exploration of the potential implications of Chinese investment in SpaceX, a significant player in the defense and aerospace sectors. It draws on credible sources like ProPublica and The Financial Times, enhancing its reliability. However, the absence of direct evidence for some claims and the lack of diverse perspectives slightly undermine its balance and transparency. The piece effectively engages readers by focusing on a high-profile company and controversial topic, but it could benefit from more detailed context and source attribution. Overall, the article raises important questions about national security and foreign investment, but it requires further verification and a broader range of viewpoints to provide a comprehensive analysis.

Accuracy

The story presents several factual claims that generally align with known information about SpaceX and its operations. For instance, SpaceX's role as a defense contractor for the Pentagon is a well-documented fact. However, the article's claim about SpaceX allowing Chinese investment through offshore hubs requires more concrete evidence, such as financial records or direct confirmation from SpaceX. The piece also discusses a corporate dispute and testimony involving SpaceX's CFO, which needs verification through court documents or statements from involved parties. While the article draws on credible sources like ProPublica and The Financial Times, some claims, such as Elon Musk's briefings by the Pentagon on a potential war with China, lack direct citations, reducing the overall accuracy.

Balance

The article primarily focuses on the potential risks and controversies surrounding Chinese investments in SpaceX, which might skew the narrative towards a more negative perspective. While it raises valid national security concerns, it does not equally explore potential benefits or the company's perspective on these investments. The lack of comments from SpaceX or Chinese investors themselves further tilts the balance, as it omits their viewpoints. Including diverse perspectives would provide a more comprehensive view of the situation.

Clarity

The article is generally clear and well-structured, with a logical flow of information. It effectively outlines the main issues surrounding Chinese investment in SpaceX and the potential national security implications. However, some sections, such as the details of the corporate dispute, could be more clearly explained to ensure readers fully grasp the context. The language used is accessible, but occasionally, the article assumes a level of prior knowledge about SpaceX and its operations that might not be familiar to all readers.

Source quality

The article references reputable sources such as ProPublica and The Financial Times, which are known for their investigative journalism. These sources enhance the credibility of the information presented. However, the article could benefit from a wider range of sources, including official statements from SpaceX or government agencies like CFIUS, to corroborate the claims made. The reliance on unnamed experts to comment on the implications of Chinese investment, while common in journalism, slightly weakens the source quality due to the lack of direct attribution.

Transparency

The article lacks transparency in certain areas, particularly in explaining the basis for some of its claims. For example, it mentions that SpaceX allows Chinese investment through offshore hubs but does not provide details on how this information was obtained. Additionally, while it cites ProPublica and The Financial Times, it does not disclose the methodology used by these sources to gather their information. Greater transparency in these areas would enhance the article's credibility and help readers understand the context behind the claims.