Here’s how and why Beijing celebrates Elon Musk’s visit to China
China used Musk's visit to attack Western governments that promote economic decoupling and to revive its image as a country open to business. Here are the other American entrepreneurs attracted to the Dragon
China is a complicated country for Western companies to manage: it has a vast market that allows for large sales , and giving up is difficult; on the other hand, however, China is also an authoritarian and potentially hostile nation on which the US government (above all) and the European Commission would like to be less dependent, at least in strategic sectors. In short, doing business in China opens up opportunities but also involves risks for companies; some of these, due to the political context, have decided to move their manufacturing capacities elsewhere: India and Vietnam are the most popular destinations.
This week Elon Musk – CEO of Tesla, founder of SpaceX and owner of Twitter, among other things – paid his first visit to China in three years, with the main goal of reviving the production of electric vehicles in the large plant in Shanghai. Chinese newspapers used the visit of the South African billionaire to relaunch the official message of the Beijing government: China is open for business.
NOT JUST MUSK: ALL THE RECENT VISITS OF AMERICAN CEOS TO CHINA
As Quartz reconstructs, Musk is just one of many CEOs of US companies who have visited China in recent weeks, such as Jamie Dimon (JPMorgan), Laxman Narasimhan (Starbucks) and Mary Barra (General Motors); Tim Cook from Apple and Albert Bourla from Pfizer arrived in March.
– Read also: Why China pampers JpMorgan and Standard Chartered
THE CHINA VERSION
Capital News , a portal linked to the government newspaper Beijing News , wrote that “Musk's visit to China is certainly not a coincidence” and that “these frequent visits [by foreign CEOs, ed ] have attracted worldwide attention. The importance China attaches to foreign companies' investment and operations in China is evident.
Capital News then compared the interest of Western entrepreneurs in the Chinese market with the policies of detachment (partial and cautious, especially as regards Europe) carried out by Western governments, defining the visits of Musk and the other CEOs as “a hard slap in the face to some politicians”.
wrote Capital News, adding that the trips by Musk and others are "a hard slap in the face to some Western politicians."
IS MUSK THE IDEAL MAN FOR CHINA?
As Reuters wrote, Elon Musk is the ideal foreign investor for Beijing because he opposes the so-called decoupling , i.e. the decoupling between the US and Chinese economies. Decoupling is a term that, in reality, Joe Biden's administration rejects: as Treasury secretary Janet Yellen explained , Washington does not want a total economic detachment from Beijing, but limited to some strategic sectors, such as microchips and critical metals for the energy transition.
Musk told Chinese officials that he is against decoupling and that the American and Chinese economies are "Siamese twins", i.e. very closely linked to each other: in 2022, despite the tensions, bilateral exchanges reached a record 690 $.6 billion .
In the past, Musk has issued statements favorable to the Chinese government, saying for example that China should be granted partial control of Taiwan, a de facto independent country but which Beijing considers part of its territory even though it has never governed the island.
Dimon of JPMorgan also thinks like Musk on decoupling , proposing rather an engagement (engagement rather than decoupling) between the United States and China, while specifying that he is in favor of de-risking , i.e. the reduction of strategic vulnerabilities in commercial relations.
WHAT TESLA WILL DO IN CHINA
After Musk met with Chinese Foreign Minister Qin Gang, the ministry issued a statement saying Tesla was committed to expanding its operations in China. As Quartz points out, the company didn't have much choice: The lease agreement for the Shanghai plant site calls for Tesla to invest $2 billion in the city by the end of the year.
Tesla is important for the Chinese electric car industry because it contributes to the so-called " catfish effect", which occurs when a strong foreign operator (Tesla, in fact) stimulates domestic competition to do better. And China, with its large market and manufacturing-friendly conditions, is important to Tesla: Last year, the Shanghai factory accounted for more than half of the company's global output.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/elon-musk-visita-cina-decoupling/ on Thu, 01 Jun 2023 08:59:26 +0000.