A recent report from ProPublica shared a rather concerning tactic SpaceX is encouraging when it comes to foreign investment. While Chinese investors are usually avoided when the company is a defense contractor, SpaceX has supported this investment through offshore shell companies, masking their identity from government regulators.
In court filings reported on by ProPublica, SpaceX’s CFO and a major investor in the company, Iqbaljit Kahlon, testified over a SpaceX blocked stock deal between Chinese companies and SpaceX. In the filings, it shows that SpaceX has, in the past, and continues to encourage investors from China looking to purchase SpaceX stock to do so through offshore shell companies in the British Virgin Islands or Cayman Islands.
These shell companies block, both from other investors and government regulators, who is actually buying the shares due to local business laws. This is not an uncommon practice, at least when it comes to non-defense contractors, as China is rich with money, but taking their money is not always popular. Hiding their identities makes it more likely for the deal to go through.
The difference with SpaceX’s case is that the company doesn’t just turn a blind eye to these sorts of companies, but actively encourages them. A practice experts tell ProPublica is concerning given the strategic importance of SpaceX both for the Department of Defense and NASA.
The public number that can be found for how much Chinese investment there is in the $350 billion company is well less than $100 million. However, given the nature of these companies, it is expected that the true value of Chinese investment in SpaceX is much, much higher.
The revelation comes from a recent corporate dispute in Delaware court that details a deal blocked by SpaceX between Kahlon and a Chinese investor to buy shares of SpaceX through Kahlon’s investment company.
Because SpaceX is a private company, it can maintain a strict grasp on how its stocks are sold, blocking any deal it finds not to be in the best interest of the company. In this case, reports of the deal leaked, making the company look bad for taking Chinese money; SpaceX blocked it.
Kahlon is a long-time investor in SpaceX, dating back to the company’s early beginnings. Kahlon stated he has completed multiple deals with SpaceX in the past to sell shares of the company to Chinese-financed shell companies. Along with bringing new investors to the company, Kahlon has been used as a middleman between countries like India to bring its Starlink service to the region.
Chinese investment, along with investments from other rival countries like China, Iran, or North Korea, is heavily relied upon by defense contractors. The title “defense contractor” is a rather new one for the company to hold, as just a few years ago, SpaceX only served the defense sector as a launch provider. Now, SpaceX provides Starlink internet service to both the US and governments worldwide and has a contract to produce satellites specifically for the Defense Department’s new constellation.
The White House states that “Certain foreign adversaries, including the People’s Republic of China, systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries.” For those wondering, this came from President Trump’s “National Security Memorandum on America First Investment Policy” he issued on February 21, 2025.
Elon Musk, SpaceX’s majority owner and CEO, has become a key advisor to President Trump. While the billionaire does hold a Top Secret security clearance, SpaceX lawyers have reportedly urged the company not to push for an “Above Top Secret” clearance that some SpaceX employees have due to concerns over Musk’s foreign contacts and drug use.
Musk’s greatest source of his wealth, Tesla, has a large operation in China as well, and is also a big buyer of the company’s electric cars. Tesla’s reliance on China’s manufacturing might have been a major concern for many, given Musk’s newfound control over parts of the US government.
Large investments from China into, frankly, one of the most important contractors for the nation’s space program, as of right now, would also cause grave concerns about China’s potential control over Musk.
