SpaceX, the pioneering American aerospace company founded by Elon Musk, has found itself at the center of a growing storm over foreign investments and global security. On October 2, 2025, revelations surfaced from a former insider’s legal deposition indicating that SpaceX accepted direct financial investments from Chinese investors. This disclosure, first reported by ProPublica, has set off alarm bells in Washington and added fresh fuel to the already simmering tensions between the United States and China over technology, security, and economic influence.
The details of these Chinese investments remain murky. According to ProPublica, “the scope of Chinese investment in SpaceX or the identities of the investors” are still unknown. Yet the mere suggestion that one of America’s most critical aerospace and defense innovators could have direct financial ties to China has prompted immediate concern among government officials, national security experts, and industry observers. As the United States continues to scrutinize foreign investments in sensitive sectors, the SpaceX case has quickly become a flashpoint in the debate over how to balance innovation, capital flows, and national security.
Founded in 2002, SpaceX has consistently pushed boundaries in space exploration, from reusable rockets to the ambitious Starlink satellite network. Over the years, it has attracted a diverse array of backers, including private equity firms and venture capitalists. However, the possibility that Chinese investors have provided direct funding introduces a host of complex questions. The U.S. government has long warned about the risks of foreign capital in critical technology sectors. A 2023 report by the U.S. Treasury Department underscored the dangers, stating that foreign capital flows into sensitive industries could “pose risks to national security,” and called for more stringent regulations and oversight.
The insider’s testimony is particularly striking because it claims the investments were direct, not funneled through third parties or shell entities. While no specific figures or investor identities have been disclosed, the testimony aligns with a broader trend. According to a 2022 Brookings Institution report, about 10% of all foreign investments in U.S. technology firms faced heightened scrutiny due to national security concerns. The possibility that an industry leader like SpaceX could be subject to such risks has prompted calls for congressional hearings and reviews by the Committee on Foreign Investment in the United States (CFIUS), which is charged with evaluating the impact of foreign investments on national security. The National Defense Authorization Act (NDAA) already includes provisions restricting foreign investments in defense-related companies, raising questions about SpaceX’s compliance with these regulations.
SpaceX, for its part, has not issued any public response to the insider’s testimony or the allegations regarding Chinese investment. This silence may be a calculated move as the company navigates the legal and regulatory fallout. Elon Musk, known for his outspoken nature and willingness to defend his companies on social media, has yet to make a statement. Industry watchers are keenly observing how Musk and SpaceX will address the controversy, especially as pressure mounts from both lawmakers and the public.
The American concern is clear: Chinese capital in an American rocket company is seen as a potential threat to U.S. national security. The narrative echoes other recent stories—such as U.S. military contractors relying on Chinese-made drone parts, or revelations about China-based researchers contributing to sensitive U.S. government technology. Yet, as ProPublica notes, the story is more complicated than a simple “China threat” frame. In today’s globalized economy, capital, technology, and talent flow across borders with remarkable speed and complexity. Even geopolitical rivals like the U.S. and China often find themselves deeply intertwined, sometimes in ways that are uncomfortable or even paradoxical.
Interestingly, while Washington frets over Chinese investments in SpaceX, Beijing has its own anxieties about the company. In May 2022, the People’s Liberation Army (PLA) Daily published a sharply critical commentary on SpaceX’s Starlink program, warning that its unchecked expansion could tilt the balance of power in outer space. The PLA Daily’s headline pulled no punches: “Beware the Barbaric Expansion and Militarization of Starlink.” The article noted that a SpaceX Falcon 9 rocket had launched 53 Starlink satellites into low-earth orbit in April 2022, pushing the total to nearly 2,400 satellites. During the Russia-Ukraine conflict, SpaceX supplied high-speed internet to Ukraine using Starlink devices, which, according to the PLA Daily, may have supported Ukrainian military operations.
SpaceX’s ambitions for Starlink are vast. The company plans to increase the number of satellites from 12,000 to an eye-popping 42,000, raising international concerns about security and the militarization of space. Starlink’s military connections are well documented: between 2019 and 2021, SpaceX worked with the U.S. Air Force and Army on encrypted data transmissions and secured contracts worth up to $150 million for military-use satellites. On March 31, 2025, the U.S. Air Force reported successful encrypted data transmissions between F-35A fighter jets and Starlink satellites at speeds up to 160 Mbps—thirty times faster than traditional connections. These capabilities, critics argue, could give the U.S. military a significant edge in future conflicts.
Chinese analysts warn that Starlink’s global internet network could challenge other countries’ cyberspace sovereignty and information security. The PLA Daily commentary described SpaceX’s efforts as an “enclosure movement” in space, aiming to monopolize orbital positions and frequency resources. If SpaceX follows through on its plan to launch 42,000 satellites, it could occupy over 80% of the available low-earth orbit slots, effectively dominating the strategic resource. The article also noted that SpaceX controls an integrated industry chain, from satellite manufacturing and ground stations to rocket launch, recovery, and satellite operations. The expansion could create a vast “Starlink biosphere” and allow SpaceX to dominate future space application markets.
Amid these crosscurrents, experts on both sides of the Pacific are calling for greater transparency and oversight. Dr. Emily Choi, a cybersecurity expert at the University of California, told ProPublica, “Foreign investments in critical sectors like aerospace should be closely monitored to prevent potential risks to national security.” The American Enterprise Institute has similarly highlighted the need for transparency in foreign investment to maintain public trust in U.S. technology firms. For Chinese officials and analysts, the concern is less about financial flows and more about the strategic implications of SpaceX’s technological dominance and its close ties to the U.S. military.
The SpaceX saga thus encapsulates the tangled web of interdependence and rivalry that defines U.S.-China relations in the 21st century. As the global aerospace industry shifts and companies increasingly seek domestic funding to avoid regulatory headaches, the debate over SpaceX’s finances will likely shape future policies on foreign investment, national security, and technological innovation. In the end, the case may serve as a cautionary tale about the risks and rewards of globalization in a world where economic and strategic interests are more entangled than ever before.
