The Eve of Apple’s and Tesla’s Red China Destruction

How Elon Musk and Tim Cook Surrendered Their Companies to Beijing

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The Eve of Apple’s and Tesla’s Red China Destruction

American CEOs who succumb to the lure of Communist China’s sweat shops, pollution havens, and massive government subsidies inevitably lose not just their souls.  They eventually surrender their companies. 

Apple’s CEO Tim Cook and Tesla’s Elon Musk are just the latest in a long line of American dupes now learning this harsh lesson – a lesson they should have learned long ago from General Electric’s former CEO Jeff Immelt. 

In 2001, Communist China joined the World Trade Organization (WTO) and immediately began to bludgeon blue collar America with its weapons of job destruction – IP theft, currency manipulation, massive government subsidies, state-owned enterprises, etc.  Immelt took over the reins of GE that same year from the venerable Jack Welch, and soon began offshoring GE production.

It was a big bet many America CEOs were putting down on Communist China along with Immelt.  Yet, it was truly a suckers bet bound to go bust.

As a matter of mercantilist government policy – it’s all there in state documents for any American CEO to read -- China uses its honey pot of cheap labor, lax environmental regulations, and massive land, energy, and other government subsidies to lure foreign capital and companies.  China’s quid pro quo, quite against WTO rules, is the forced transfer of an American company’s technology to nascent Chinese competitors in exchange for access to Chinese markets.

Implicit in this Dragon’s Bargain is this paradigm of assumed inevitability: Once a Chinese competitor is sufficiently endowed with American technology, it will not only compete against that American company in Chinese markets.  It will also challenge that American company in lucrative markets around the world. 

Nor will this inevitable clash be fair.  Communist China uses any means necessary to give its national champions a big leg up on – and often a kick to the groin to -- any American competitor foolish (or greedy) enough to produce on motherland soil. 

Like GE before it, Apple and Tesla now this grim mercantilist reality.  Because Cook and Musk each directed the offshoring of the vast bulk of Apple’s and Tesla’s production to Communist China, both companies are at the particular mercy of a merciless dictator in Xi Jinping.

Indeed, Communist China’s national champion Huawei is now pummeling Apple. To assist Huawei’s frontal and all flanks assault,  China has banned its government officials from using iPhones. Xi Jinping’s autocrats are also aggressively leveraging Chinese nationalism to encourage its citizens to “Buy China” and shun foreign devil products like iPhones.

Not surprisingly, Apple is now looking at a double digit loss of Chinese market share in 2024.  Of course, it’s a zero sum game as Apple’s losses will be gains for Huawei and even smaller fish like Xiaomi.

Tesla faces its own eventual destruction with the sudden emergence of BYD.  This is a very formidable Chinese national champion weaned on both China’s massive subsidies and its blatant theft of Tesla technologies and styles -- BYD recently stunned the world by vaulting over Tesla to the top of electric vehicle production not just in China but in the world.

Musk’s Teslas are also undergoing a similar kind of xenophobic Chinese ban.  Teslas are prohibited from entering Chinese military complexes or housing compounds on the flimsy grounds the cars will be used to spy on China. 

Both arrogance and hubris are common threads that run from Immelt in the 2000s through Cook and Musk today  These master of the universe Americans always assume they can outwit China’s gypsies, tramps, and IP thieves.

In 2011, Musk, for example, laughed off BYD – but Musk isn’t laughing now.  Nor is Cook.  Meanwhile, the ghost of the great Jack Welch spins in his grave every time he thinks about how Immelt destroyed both Welch’s legacy and the beautiful GE Welch built.

During my years in the West Wing, I watched Apple’s Tim Cook in particular try to subtly lobby my old boss, often through Trump son-in-law Jared Kushner, for relief from Trump’s tariffs. Cook inevitably argued that Apple was “too big in China to tariff” and therefore bring the company great harm.

To Cook today, I would simply say, you should have been far more careful of what you asked us for.  If you had done what folks like President Trump, Bob Lighthizer, and me wanted, you would have steadily reduced your China exposure instead of doubling down to the point of putting your company at gravest risk.

To protect his world’s largest EV factory in Shanghai, Musk has been more of a loud, kowtowing bull in the pro-China lobbying shop.  Musk openly praises the butchers of Beijing – the persecution of Uighurs, Christians and political dissidents be damned. 

Musk has also called for the subjugation of the vibrant democracy of Taiwan even as he uses his vast fortune and Twitter platform to thwart Xi Jinping’s nemesis Donald Trump in 2024.  It remains an open question as to how one of the smartest and richest men on the planet can continue to be so stupid and devoid of ethical fiber.

Whether you are a big hedge fund manager or a small retail investor, you have to wonder whether Apple or Tesla are still safe investments – at least on the long side, if you get my drift. 

If you are a red-blooded American, you also have to wonder whether it is long past time for the US government to stop the flow of American capital and the offshoring of America’s factories to Communist China.  Clearly, American CEOs and Wall Street won’t do it on their own.

Peter Navarro served for four years in the Trump White House as manufacturing czar and chief China strategist. 

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