CCP's Sharp Turn: Tesla Turns Red? Unpacking Xi Jinping's Strategic Calculus!

Tesla's FSD approved. What is the CCP's calculus? Chinese banks fear U.S. sanctions, pushing China-Russia trade settlements underground. Major sports brands' market value has dropped more than 80%. TikTok general counsel to move to new role focused on fighting U.S. sale. U.S. nonprofit submits over 81,000 names of China's human rights abusers to FBI. It's all covered in today's China Truths. Tesla's FSD approved. What is the CCP's calculus? Elon Musk's recent visit to Beijing and meeting with Chinese Premier Li Chang have had significant impacts, with Tesla's stock price surging by 40% to $198.87. During this visit, Chinese officials granted preliminary approval for Tesla's full self-driving FSD technology in China, and Tesla announced a collaboration with Baidu for advanced mapping services necessary for autonomous driving. However, Tesla is facing challenges. Political commentator Xi Jinping has analyzed these issues on his recent program, Xi Jinping Observation. Recent financial reports show a decline in revenue and profits, and vehicle deliveries missed expectations, leading to a 10% workforce reduction and doubts about Tesla's future growth. Despite these issues, new opportunities in China, such as the approval for autonomous driving, could revive Tesla's fortunes. Musk's ambitious plans for Araba taxi service at competitively low rates could potentially skyrocket Tesla's revenue to $100 billion by 2030. Yet, there are significant hurdles. Musk needs approval to export Chinese customer data to the US for AI training, a request that the Chinese government is likely to deny. This could complicate the deployment of advanced AI technologies and negotiation with US regulatory bodies about data transfer, posing a significant dilemma for Tesla's strategy in China. The question remains, when will the full potential of this pie be realized? CCP's sudden change of face, she's playing a grand strategic game. Many people express concerns that Elon Musk could face severe repercussions, such as being coerced, dyed red by the CCP, having his cutting-edge technology stolen, discarded after use, or being pushed into making concessions in various domains for the CCP. Certainly, the CCP is eager to acquire as much from Tesla as possible, attracted by Musk's revolutionary technologies including Starlink, super-heavy launch rockets, and spacecraft, which are central to futuristic Star Wars-like capabilities. Yet, according to Mr. Xi Jinping, the CCP's immediate priorities are elsewhere. This stems from Xi Jinping's current preoccupations. Blinken's visit to China ended without any substantial agreements. This implies that the US and Europe might soon impose further sanctions in response to the CCP's backing of Russia. Simultaneously, China faces substantial pushback from the West against its excess production capacity, particularly in sectors like electric vehicles that she has actively promoted. Amid these challenges, the Chinese government has unexpectedly eased restrictions on Tesla, which had been tightly controlled. The CCP's strategy is transparently aimed at achieving four goals. First, to display its openness to foreign investments to attract more international capital. Second, to coax corporations like Tesla into handing over their core technologies and sharing more valuable data for market access. Third, to leverage its favorable treatment of Tesla to politically counteract the trade wars launched by the US and Europe. This strategy was articulated through Li Chang's statements, circulated by the People's Daily's self-media account Niu Tanchin. Li remarked, The economies of China and the US are deeply integrated, each benefiting from the other's development. Tesla's success in China exemplifies the potential of China-US economic and trade cooperation. This comment indirectly appeals to the US to cease the trade war and lift pressure on the CCP, suggesting a more equal partnership. His second comment emphasizes that foreign enterprises are vital participants in and contributors to China's development, and our vast market will remain open to them. This rhetoric attempts to obscure the CCP's longstanding policy of prioritizing state-owned enterprises over private ones, discriminatory practices, and intellectual property theft. Furthermore, the CCP is notably replacing systems and hardware from Intel, AMD, and Apple within government and state enterprises. The CCP's fourth objective is to build a long-term strategy aimed at significantly improving China's new energy vehicle industry and developing its global competitiveness. Niu Tanchin noted that the partnership potential between the CCP and Tesla is limitless, and this was echoed by Li Chang at the Beijing Auto Show, where he highlighted the advancement of smart, connected new energy vehicles. This sudden shift in strategy shows that after previously putting significant pressure on Tesla, the Chinese government has eased its stance. Their aim is to use Tesla's influence to enhance China's own capabilities in smart technology and other sectors. The CCP believes that these moves will position China as a standout competitor in the global electric vehicle market, with a higher base in artificial intelligence and energy storage technologies. Additionally, the CCP has orchestrated partnerships for Tesla with Chinese firms that have been first to receive market access, like BYD, Li Auto, Lotus, Hosin New Energy, and Nio, with others such as Huawei and Xiaomi expected to join. This strategic collaboration has helped cultivate a robust network of over 400 Chinese suppliers for Tesla, with more than 60 becoming part of its global supply chain, largely due to Tesla's open patent policy. Moreover, Tesla has expanded its manufacturing footprint into Mexico, which serves as a strategic move into America's economic sphere. In 2023, China exported automotive components worth $1.1 billion to the U.S. from Mexico, marking a 15% increase from the previous year. Among these, 33 Chinese companies were registered in Mexico, with 18 directly exporting to the U.S. Under the 2022 Inflation Reduction Act, electric vehicles assembled in Mexico qualify for a U.S. tax credit of up to $7,500. Concerns have been raised by Canadian auto component manufacturers and the United Auto Workers Union about China's strategy to circumvent U.S. trade policies by increasing investments in Mexico. This approach has not only helped China sidestep trade barriers but has also strengthened its position against Tesla with BYD surpassing Tesla as the leading global electric vehicle manufacturer, largely due to its diverse and cost-effective model range. So, the CCP is playing a big game next. However, despite these strategic maneuvers, the CCP's broader situation suggests a likely unavoidable decline. The international boycott, driven by security concerns and market flooding by Chinese new energy vehicles, coupled with the CCP's overt ambitions in geopolitics, from the South China Sea to supporting contentious actors like Russia, Hamas, and Iran, prompts Western nations to tighten technology restrictions and financial sanctions against China. Such systemic challenges suggest that the CCP's survival cannot be secured by merely engaging with Tesla or any singular industry. In this complex international landscape, the Chinese proverb about timing, location, and people implies that aligning with natural trends is essential. The CCP's widespread evil activities are leading to its gradual isolation and decline, a trend that appears irreversible under current global dynamics. Chinese banks fear U.S. sanctions, pushing China-Russia trade settlements underground. In an exclusive report on April 29, Reuters exposed that Chinese banks have stopped trade settlements with Russia amid fears of impending U.S. sanctions. This significant shift has driven Chinese exporters to seek out alternative, and at times illegal, financing methods such as underground networks and banned cryptocurrencies. Facing the risk of economic isolation, many have turned to smaller regional banks and private currency brokers in a desperate effort to sustain their operations. This situation has particularly impacted smaller exporters and highlights the increasing complexity of global trade dynamics in the face of international sanctions. A Guangdong electronics firm disclosed that since early March, major Chinese banks have refused to process transactions with Russia due to sanctions fears. This withdrawal has prompted companies, including an appliance manufacturer, to explore alternative payment methods like using currency brokers on the China-Russia border. The company's founder, Mr. Wang, voiced his frustrations over the dysfunction of official channels and the severe delays in payment processing, which have pressured businesses to adopt unofficial payment solutions or scale down their operations. Mr. Wang also revealed that despite establishing accounts at seven different banks, none would process payments from Russia. Hindered by the failure to receive over 10 million yuan, 1.4 million dollars, from Russian transactions, he described the payment process as incredibly aggravating. This persistent issue is forcing him to reconsider his business presence in Russia due to its adverse effects on his company's liquidity management. He also expressed apprehension about the future reliability of these payment channels, fearing they might eventually be completely shut down. Moreover, heightened vigilance among China's major banks concerning Russian-linked transactions has led to a marked decrease in business related to Russia, with the biggest state-owned banks, including China Construction Bank and the Agricultural Bank of China, reporting asset reductions of 14% and 7%, respectively. This pullback is in response to the risk of U.S. sanctions, which have reversed the asset growth seen following Russia's invasion of Ukraine. According to Reuters, U.S. officials have indicated they are prepared to sanction Chinese financial institutions that facilitate trade in both civilian and military goods, though specific plans have not yet been confirmed. With the sensitive nature of the data, the sources have remained anonymous, and the extent to which transactions have moved to more clandestine channels is still uncertain. Both the People's Bank of China and the China National Financial Regulatory Commission have yet to respond to inquiries about these developments. TikTok General Counsel to Move to New Role Focused on Fighting U.S. Sale Eric Anderson, General Counsel for TikTok and its parent company ByteDance, will resign from his current role in June to focus on opposing U.S. efforts to force the sale of TikTok. Anderson will become special counsel to lead TikTok's legal battle against recent legislation, signed by President Joe Biden, which mandates ByteDance to divest TikTok in the U.S. within 270 days or face a ban. This legislation is being challenged by TikTok on First Amendment grounds, and TikTok's users are expected to take legal action as well. Anderson has been instrumental in past legal victories for TikTok, including blocking attempts by the Trump administration and the state of Montana to ban the app. TikTok, which denies sharing U.S. user data with the Chinese government, is backed by CEO Zhou Zichu who supports Anderson's transition to special counsel, emphasizing the importance of this fight. The company remains optimistic about overturning the ban in court. The four-year battle over TikTok is a significant front in a war over the Internet and technology between Washington and Beijing. Major Sports Brands' Market Value Has Dropped More Than 80% In recent years, Li Ning Company, Ltd., a leading Chinese sports brand, has seen its market value plummet by over 80% from its peak in 2021, dropping from more than HK$280 billion — about US$35.8 billion — to around HK$50.7 billion — nearly US$6.5 billion. This decline has made it the only domestic-listed sports brand to report a decrease in profits according to its 2023 financials. Its net profit fell by 21.58% despite a 7% increase in revenue. The company, founded in 1990 by former gymnast Li Ning, faced significant inventory pressures by 2022, nearly doubling from 2020 levels due to pandemic-related challenges and shifting consumer trends. This inventory rise coincided with increasing product prices, alienating customers and damaging its brand reputation. Recent consumer feedback indicates perceived declines in product quality and durability. Amidst these challenges, rumors of potential privatization surfaced, with Li Ning stating openness to any plan that could enhance investment returns. Additionally, the brand has been criticized for supporting the use of Xinjiang cotton amid China's massive crackdown on Uyghurs and other Muslim minorities. Researchers say Xinjiang cotton likely comes from forced labor by Uyghurs. US non-profit submits over 81,000 names of China's human rights abusers to FBI. The World Organization to Investigate the Persecution of Falun Gong, abbreviated as WOIPFG, announced on April 27 that it had submitted a list of 81,340 human rights violators to the FBI, among them Chinese doctors and Chinese Communist Party officials, who allegedly have been involved in persecuting adherents of the spiritual practice Falun Gong. The list includes 9,011 individuals suspected of involvement in the Chinese regime's forced organ harvesting, a number of whom are affiliated with Chinese hospitals and medical institutions. Another 52,063 individuals on the list had been investigated by WOIPFG for their alleged involvement in planning and executing illegal arrests, detentions, and tortures of Falun Gong practitioners. WOIPFG said in a statement, FBI officials have expressed their interest in the list and stated their intention to put the individuals who were proven guilty on their no-entry list into the United States and take necessary actions. As we've kept reporting, Falun Gong practitioners have been facing persecution in China since 1999, the year then-CCP leader Jiang Zemin started a brutal campaign to eradicate the practice. Before the start of the persecution, the practice, also known as Falun Dafa, was popular in the country, with about 70 to 100 million adherents in 1999, according to the official data from the Chinese government. According to the Falun Dafa Information Center, millions of Falun Gong practitioners have been detained inside prisons, labor camps, and other facilities, and hundreds of thousands have been tortured while incarcerated. Many have been killed, some to supply organs for the communist regime's lucrative transplantation industry. In 2019, the China Tribunal, an independent people's tribunal in London, concluded that Beijing had been forcibly harvesting organs from prisoners of conscience for years on a substantial scale, with Falun Gong practitioners being the principal source of human organs. Mr. Wang Jiyuan, president of WOIPFG, said in a statement that Beijing's persecution of the practice is a crime of genocide and a crime against humanity. Also on the list were 9,109 people from Beijing's 610 Office and 11,157 people affiliated with the Political and Legal Affairs Commission, PLAC, a party organ that oversees China's judicial and security matters. Jiang Zemin set up the 610 Office, named for its founding date of June 10, 1999, for the sole purpose of carrying out his orders to persecute Falun Gong practitioners. The office would function in a manner akin to Nazi Germany's Gestapo, with powers overriding China's courts and police. Internal documents show that while the 610 Office was officially disbanded between 2018 and 2019, its functions were merged into other Beijing organs, including the PLAC and the Ministry of Public Security. In 2019, U.S. Falun Gong practitioners submitted a list of people who had committed human rights abuses, urging the State Department to deny those individuals entry to the United States. On April 25, Republican Rep. Chris Smith from New Jersey and Democratic Sen. Jeff Merkley from Oregon, chair and co-chair of the Congressional Executive Commission on China, respectively, issued a statement calling on China to end its quarter-century-long persecution of Falun Gong. The day marked the 25th anniversary of a peaceful protest held by about 10,000 Falun Gong practitioners from all over China outside Beijing's leadership compound in Beijing, to appeal for their right to freely practice their beliefs. Don't forget to leave a comment in the section below to share your opinions on today's topic with us. Make sure to like and subscribe to see more interesting topics from China Truths.