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Musk has substantial business interests in China

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Billionaire is close Trump ally heading effort to downsize

government

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China sees some Musk ventures as security risks

By Michael Martina and David Brunnstrom

WASHINGTON, Feb 25 (Reuters) - The Republican and

Democratic leaders of the U.S. House of Representatives' select

committee on China warned on Tuesday that Beijing may try to

exert leverage with Elon Musk in a bid to win more favorable

U.S. policies, and Washington must counter any such effort.

Republican committee chair John Moolenaar and Democratic

ranking member Raja Krishnamoorthi said they believed the

Communist Party of China wants to use U.S. business leaders

including Musk, who have commercial interests in China, to

advance its goals in talks with Washington.

"To the question of Elon Musk, I do believe that the CCP will

try and leverage any opportunity," Moolenaar told an event

hosted by the Brookings Institution thinktank in Washington.

"Are people going to be looking for that and make sure that

his lane is one that is not influencing China policy? I believe

that is the case," Moolenaar said, when asked if Congress has a

role in preventing Beijing from negotiating with the White House

through Musk.

Musk, the White House and China's embassy in Washington did

not respond immediately to requests for comment.

China has some pressing priorities. Just over a month into

his second term, President Donald Trump has announced additional

10% tariffs on Chinese goods, called for greater restrictions on

Chinese investment in the U.S., and named China hardliners to

key posts.

Musk, the world's richest man and among Trump's biggest

donors in the 2024 election, could be attractive to Beijing as a

potential conduit to Trump because he has become one of the

president's closest White House advisers.

Trump named Musk to lead a signature effort to radically

downsize the federal government.

The billionaire also for years has had contact with senior

Chinese officials, including President Xi Jinping.

China may also be able to grant Musk things that he

wants. His biggest business interest in China is electric car

company Tesla, which he co-founded and leads as CEO. Tesla

delivered 36.7% of its cars to customers in China last year, its

second-largest market worldwide based on sales.

But Tesla's market share has declined in China as domestic

electric vehicle makers have grown, and it has faced regulatory

roadblocks to the rollout of its self-driving features there

that could boost sales while regulators have allowed Chinese

firms to move ahead.

Apart from Tesla, some of Musk's other ventures including

commercial rocket and satellite firm SpaceX and social media

platform X - the latter is banned in China - are viewed by

Beijing as security risks.

CIRCUMVENTING CHINA HAWKS

Krishnamoorthi told the Brookings event that Beijing viewed

Musk as way to circumvent China hawks on Trump's national

security team, including Secretary of State Marco Rubio and

national security adviser Mike Waltz.

"They absolutely see him as an asset to them in any kind of

negotiations, a way to bypass Rubio, a way to bypass Waltz, a

way to bypass those whom they see to be less friendly to them on

their issues," Krishnamoorthi said.

"My hope is that the president is going to be listening to

everybody very carefully," he said.

The lawmakers did not detail the evidence supporting their

views.

The White House has said Musk has no decision-making

authority in the Trump administration and his efficiency

initiative has no direct involvement in U.S. foreign policy.

Trump's praise for Xi and Russian President Vladimir Putin

have stoked concerns that he might pursue a grand bargain with

Beijing that sidelines Taiwan. China claims the island as its

territory, and Taipei has historically counted on Washington as

its most important backer, a major irritant to China.

Krishnamoorthi said he worried Trump could put core U.S.

interests, such as support for Taiwan or freedom of navigation

in the South China Sea, up for negotiation in any direct talks

with Xi to achieve wins on trade.

Moolenaar said he had confidence in Trump's national

security team, but also "limited hopes" for what talks with

China might achieve given Beijing's failure to live up to past

promises.

But he urged Taiwan not to pursue defense spending cuts

proposed by its parliament, saying this would send "the wrong

signal."

"You can't have a division within Taiwan about the

importance of their own national security," he said.