Beijing beckons
On Tuesday, Elon Musk's private jet touched down in Beijing, marking his first visit to China in over 3 years. The billionaire met with the nation's foreign, commerce, and industry ministries and shared an extravagant 16-course meal with the chairman of CATL, China’s leading battery supplier.
The country, home to more than 50% of electric vehicles on the world’s roads, has become an increasingly important market for Musk's Tesla. Indeed, in the company’s most recent quarter, China contributed ~$5 billion in revenue, accounting for 21% of the total figure. Tesla does a great deal of manufacturing in the nation too — its most productive factory, located in Shanghai, churned out over 700,000 Model Y and Model 3 vehicles last year, over half of the company's global output.
Complicated relationship
As relations between the US and China strain, businesses are finding themselves caught in the middle. Just last week, China blacklisted US memory chip maker Micron. Given the immense value of the Chinese market to Tesla, it’s unsurprising that Musk opposes the idea of "decoupling" between the world's 2 largest economies.
The value of the relationship is felt both ways, however. Foreign investment in China slumped 74% in 2022, an 18-year low. And, while the nation's stringent lockdowns contributed to the downturn, the reopening of the economy has only yielded a modest 6% increase. A recent survey revealed that, for the first time in ~25 years, China isn’t a top three investment priority for a majority of US firms — a clear sign that maintaining strong ties with companies like Tesla is perhaps as important to the nation as it is to the businesses themselves.
