Billionaire Elon Musk and his young DOGE minions set off alarm bells this week as they ripped through sensitive government databases and payment systems in a slash-and-burn effort to chop federal spending. That's a problem because he's not an elected official, many of his moves may prove to be fully illegal (let alone unconstitutional), and he's in a position to use his DOGE power to directly benefit his companies. But that's not all.

Profitability for Tesla — the largest source of his wealth — depends on one of America's biggest adversaries: China.

Tesla and Musk enjoy a particularly cozy relationship with China’s Communist Party leaders, receiving permission to own and operate its plant there without a local partner, a requirement for every other non-Chinese automaker. And it was the only growing market for Tesla last year as sales in the U.S. and Europe slumped. Critically, it was the opening of the Shanghai Gigafactory five years ago that reversed Tesla’s financial fortunes after a decade of red ink. Since 2020, the plant’s first year of operation, the company has remained consistently profitable. With its sales outlook murky, China’s importance to Tesla and to Musk’s personal wealth is even greater than before.

He’ll “jump like a circus monkey when Xi Jinping calls in the hour of need”

And that raises Musk’s need to please Chinese authorities, who could pressure him if Trump’s policies are at odds with their priorities. Or as Vivek Ramaswamy, briefly Musk’s DOGE wingman, put it on his podcast in 2023: the billionaire will “jump like a circus monkey when Xi Jinping calls in the hour of need.”

Musk, a frequent and aggressive critic of former President Joe Biden, is downright warm and fuzzy when it comes to comments directed toward China’s leaders on X, his social media soapbox. His wooing of Chinese leadership goes back a decade, starting with a 2015 visit in which he pitched CCP leaders on Tesla opening a plant there, Forbes recently reported. During the approval process for a massive Shanghai plant, which got at least $1.4 billion in loans from state-affiliated banks, Musk worked closely with Li Qiang, the Communist Party official then governing Shanghai. These days, Li is China’s No. 2 behind Xi, serving as premier since 2023.

Last month, a day before Trump’s inauguration, Chinese Vice President Han Zheng was in Washington for a meeting with Musk, encouraging Tesla and other U.S. companies to “make new and greater contributions to closer economic and trade ties” between the nations, according to the state-run Xinhua News Agency. Musk, often potty-mouthed and petulant on X, replied that Tesla was ready to do exactly that.

Other major U.S. companies, such as Apple, also have close ties to China. Tesla’s, though, is on a different level. Besides its special deal to wholly own its plant, a free pass on the joint-venture requirement that Toyota, General Motors and other automakers were saddled with, Tesla also benefits from cheaper Chinese labor, parts and materials and logistics costs that have made its Shanghai Gigafactory a money machine.

“They have more production capacity there than they do in the rest of the world,” said Sam Fiorani, vice president of AutoForecast Solutions. “It just defaults to being the single most important market–it outsells every other market.”

Unlike in the U.S., Chinese Tesla buyers will continue to receive government incentives, averaging around $2,000. A pollution crediting system modeled after California’s Zero-Emission Vehicle program also generates extra money for the company. (Trump’s administration has already rolled back tougher fuel-economy standards, which could eliminate a big chunk of Tesla’s lucrative sales of emissions credits to other automakers.)

But there’s a price for the favor it's received.

“China does not tend to give things away. The country’s laws stipulate that the Communist Party can demand intelligence from any company doing business in China, in exchange for participating in the country’s markets,” retired U.S. Army Lt. General Russel Honoré wrote in a Dec. 29 New York Times opinion piece that argued Musk is a national security risk.

“This means Mr. Musk’s business dealings in China could require him to hand over sensitive classified information, learned either through his business interests or his proximity” to Trump, he said.

Even if the CCP hasn’t twisted Musk’s arm yet, they have all the leverage they could ever need — and that makes Musk a dangerous person to be in such a choice position in Trump’s inner circle, let alone to remake the federal government as he sees fit.

In a week’s time, DOGE, largely comprised of Musk’s lieutenants from his companies, plus a cadre of young engineers brought on to carry out his agenda, has offered mass buyouts to all federal workers (at least 40,000 have accepted so far), obtained sensitive tax and financial information for millions of Americans and accessed the Treasury Department’s payment system. Right now, it’s up to Congress and the federal courts to act fast enough to prevent potentially massive damage to government programs.

The fact that Musk could cut or alter federal agencies that regulate his companies—like the FAA for SpaceX, or NHTSA, OSHA and the NLRB for Tesla—is wildly inappropriate and goes against all government ethics standards. (Federal jobs, particularly those in sensitive positions, prohibit “participating in matters that affect your financial interests as well as those of your spouse, minor child, or a general partner; an organization which you serve as an officer, director, trustee, partner or employee; or an organization you are negotiating with for future employment.”)

Musk has also avoided a financial review to identify conflicts of interest that’s standard for high-level government roles. However, he’s still been given top security clearance, CNN reported this week. The White House finally clarified his role as a “special government employee” on Feb. 3, an uncompensated position that typically doesn’t last longer than 130 days. Trump staffers said they’re relying on Musk to self-identify any potential conflicts.

‘Significant Conflicts of Interest’

The White House didn’t immediately respond to a request for comment on Musk’s China ties and Republicans in Congress aren’t publicly objecting to his DOGE role at this point. Democrats, however, are rallying against him.

“Mr. Musk’s dual roles—running a for-profit corporation while serving in public office—not only creates glaring conflicts of interest that pose grave risks for America’s most sacred institutions, but may also violate federal law,” wrote Senator Richard Blumenthal of Connecticut in a letter to Brandon Earhart, Tesla’s general counsel.

The senator, the ranking member of the Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations, demanded information including details of Tesla staffers working for DOGE; how Musk explained his DOGE duties to Tesla’s board and their responses; federal contracts Tesla has received in the past 12 months; and whether the carmaker has received government information as a result of DOGE activities.

Given that there appear to be “significant conflicts of interest” and “the possibility that Tesla may be enabling the violation of ethics requirements, obtaining unfair competitive advantages, and potentially violating federal laws, you are obligated to preserve all records pertaining to Tesla’s interactions with DOGE or any agent operating on its behalf,” he wrote.

And on Wednesday, Rep. Mark Pocan, a Wisconsin Democrat, introduced legislation in the House titled the Eliminate Looting of Our Nation by Mitigating Unethical State Kleptocracy (ELON MUSK) Act, that would ban special government employees from receiving federal contracts.

So far, approval ratings for Musk’s government role have dropped dramatically: Morning Consult’s latest survey found that 46% of people disapprove of his position, while 41% approve — a 10-point drop since Trump was sworn in. (And late-night TV host Stephen Colbert likened his behavior to a “chimpanzee with a chainsaw.”)

There’s reason to believe that Tesla’s growth in China — and thus Musk’s need to stay in its government’s good graces — may lessen over time. That’s because it hasn’t released a successful new model in five years (it’s $100,000 Cybertruck is a volume dud in the U.S. so far and isn’t sold in China). The company is also struggling to compete with homegrown EV makers like BYD.

“Their only volume sellers that can compete on price are Model 3 and Model Y, launched in China in 2020 and 2021. Each has been refreshed once since then,” said Bill Russo, who runs Shanghai-based consultancy Automobility. “In this same timeframe, BYD has launched 129 different models and variants including several new brands.”

If Russo’s right, weakness for Tesla in China won’t be good news for shareholders who’ve come to believe the company will only grow under Musk’s leadership. But a big drop in reliance on that market might ease worries he'll go full-on Manchurian Candidate.