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Drive an hour outside China’s commercial capital Shanghai, and you’ll reach Elon Musk’s Tesla gigafactory.

It manufactures almost one million Tesla cars a year and produces more than half of all its cars worldwide.

But with US president-elect Donald Trump preparing to move into the White House, the relationship between his new buddy Elon Musk and the leadership of China‘s Communist Party is in sharp focus.

Tesla’s Shanghai ‘gigafactory’
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Tesla’s Shanghai gigafactory. Pic: Lex Ramsay

Shanghai has been the key to Tesla’s success, largely thanks to the city’s former Communist Party secretary, now China’s premier, Li Qiang.

Chief executive of Shanghai-based Auto Mobility Limited, Bill Russo, says: “Qiang is China’s number two person. His position in Shanghai made everything possible for Tesla.”

He added: “In 2017, China adjusted its policy guidelines for the automotive industry to allow foreign companies to own their factories in China.

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Musk, Trump and China explained

“Tesla signed its deal in 2018, broke ground in 2019, and started producing the Model 3 in 2020.”

The factory opened at breakneck speak and in record time.

In April, Musk met Qiang in Beijing, later posting on X: “Honoured to meet with Premier Li Qiang. We have known each other now for many years, since early Shanghai days.”

In this photo released by Xinhua News Agency, visiting Tesla CEO Elon Musk, left, meets with Chinese Premier Li Qiang in Beijing, Sunday, April 28, 2024. Musk met with a top government leader in the Chinese capital Sunday, just as the nation's carmakers are showing off their latest electric vehicle models at the Beijing auto show. (Wang Ye/Xinhua via AP)
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Elon Musk met Chinese premier Li Qiang in Beijing in April 2024. Pic: AP

The Musk-China ties go all the way to the top.

When China’s President Xi Jinping visited the US in November 2023 he met Musk, who posted: “May there be prosperity for all” – echoing the language often used by China’s government.

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Inside a Tesla showroom in Shanghai
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Inside a Tesla showroom in Shanghai. Pic: Lex Ramsay

Musk has previously weighed into the debate over the status of Taiwan. Two years ago, he suggested tensions could be eased by giving China some control over Taiwan.

This comment incensed Taiwan’s leaders.

Chinese commentator Einar Tangen, from the Taihe Institute in Beijing, says: “If Musk had said anything else, he could face action against the Shanghai plants. He’s not going to endanger that. He’s playing both sides for his own advantage.”

What’s in it for China?

Musk needs China, and in the months to come, China may need Musk.

He could act as a well-connected middleman between the Chinese Communist Party and Trump, in the face of a potential global trade war.

“Like it or not, we are living in a world where China is the dominant player in the race to an electric future,” says Russo.

Musk pioneered the EV industry in China, but is now struggling to compete with local car brands like BYD and Nio.

President-elect Donald Trump greets Elon Musk before the launch of the sixth test flight of the SpaceX Starship rocket Tuesday, Nov. 19, 2024 in Boca Chica, Texas. (Brandon Bell/Pool via AP)
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Elon Musk’s support helped propel Donald Trump to a second term in the White House. Pic: AP

The relationship between Musk and Trump could become volatile, but for now, Musk stands to benefit.

“Donald Trump has never had a problem giving exceptions to friends,” Tangen says.

“It fits his personality, that he can grant pardons and give favours to the people and companies he chooses.”

Musk ‘the pioneer’

Musk is well regarded as a pioneer in China and most people speak of him highly.

Strolling along the Bund waterfront area in Shanghai, Benton Tang says: “Tesla really impacted the entire industry here.

“It pushed people to develop and improve the quality, the design and especially the price.”

Chinese vehicle manufacturers like BYD provide stiff competition for Tesla
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Chinese vehicle manufacturers like BYD provide stiff competition for Tesla. Pic: Lex Ramsay

Interest in the Musk family has also gripped China’s online community.

His mother, Maye Musk, frequently visits the country, where she has a huge social media following as a senior-age celebrity fashion icon and endorses several Chinese products including a mattress brand.

Her book, A Woman Makes A Plan, has been translated into Chinese and is a bestseller here.

The 76th Cannes Film Festival - Screening of the film "Asteroid City" in competition - Red Carpet Arrivals - Cannes, France, May 23, 2023. Maye Musk poses. REUTERS/Gonzalo Fuentes
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Maye Musk. Pic: Reuters

Meanwhile, as the countdown to Trump’s inauguration gains pace, the spotlight on the president-elect’s coterie of advisers intensifies.

In the middle of the glare is Elon Musk.

China waits to see what that will mean for them.

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Stock markets slump for second day running after Trump announces tariffs – in worst day for indexes since COVID

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Stock markets slump for second day running after Trump announces tariffs - in worst day for indexes since COVID

Worldwide stock markets have plummeted for the second day running as the fallout from Donald Trump’s global tariffs continues.

While European and Asian markets suffered notable falls, American indexes were the worst hit, with Wall Street closing to a sea of red on Friday following Thursday’s rout – the worst day in US markets since the COVID-19 pandemic.

As it happened: Worst week’s trading in five years

All three of the US’s major indexes were down by more than 5% at market close; The Dow Jones Industrial Average plummeted 5.5%, the S&P 500 was 5.97% lower, and the Nasdaq Composite slipped 5.82%.

The Nasdaq was also 22% below its record-high set in December, which indicates a bear market.

Read more: What’s a bear market?

Ever since the US president announced the tariffs on Wednesday evening, analysts estimate that around $4.9trn (£3.8trn) has been wiped off the value of the global stock market.

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Mr Trump has remained unapologetic as the markets struggle, posting in all-caps on Truth Social before the markets closed that “only the weak will fail”.

The UK’s leading stock market, the FTSE 100, also suffered its worst daily drop in more than five years, closing 4.95% down, a level not seen since March 2020.

And the Japanese exchange Nikkei 225 dropped by 2.75% at end of trading, down 20% from its recent peak in July last year.

Pic: Reuters
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US indexes had the worst day of trading since the COVID-19 pandemic. Pic: Reuters

Trump holds trade deal talks – reports

It comes as a source told CNN that Mr Trump has been in discussions with Vietnamese, Indian and Israeli representatives to negotiate bespoke trade deals that could alleviate proposed tariffs on those countries before a deadline next week.

The source told the US broadcaster the talks were being held in advance of the reciprocal levies going into effect next week.

Vietnam faced one of the highest reciprocal tariffs announced by the US president this week, with 46% rates on imports. Israeli imports face a 17% rate, and Indian goods will be subject to 26% tariffs.

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Do Trump’s tariffs add up?

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Markets gave Trump a clear no-confidence vote
There were no winners from Trump’s tariff gameshow

China – hit with 34% tariffs on imported goods – has also announced it will issue its own levy of the same rate on US imports.

Mr Trump said China “played it wrong” and “panicked – the one thing they cannot afford to do” in another all-caps Truth Social post earlier on Friday.

Later, on Air Force One, the US president told reporters that “the beauty” of the tariffs is that they allow for negotiations, referencing talks with Chinese company ByteDance on the sale of social media app TikTok.

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Tariffs: Xi hits back at Trump

He said: “We have a situation with TikTok where China will probably say, ‘We’ll approve a deal, but will you do something on the tariffs?’

“The tariffs give us great power to negotiate. They always have.”

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Financial markets were always going to respond to Trump tariffs but they’re also battling with another problem

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Financial markets were always going to respond to Trump tariffs but they're also battling with another problem

Global financial markets gave a clear vote of no-confidence in President Trump’s economic policy.

The damage it will do is obvious: costs for companies will rise, hitting their earnings.

The consequences will ripple throughout the global economy, with economists now raising their expectations for a recession, not only in the US, but across the world.

Tariffs latest: FTSE 100 suffers biggest daily drop since COVID

Financial investors had been gradually re-calibrating their expectations of Donald Trump over the past few months.

Hopes that his actions may not match his rhetoric were dashed on Wednesday as he imposed sweeping tariffs on the US’ trading partners, ratcheting up protectionism to a level not seen in more than a century.

Markets were always going to respond to that but they are also battling with another problem: the lack of certainty when it comes to Trump.

More on Donald Trump

He is a capricious figure and we can only guess his next move. Will he row back? How far is he willing to negotiate and offer concessions?

Read more:
There were no winners from Trump’s tariff gameshow
Trade war sparks ‘$2.2trn’ global market sell-off

These are massive unknowns, which are piled on to uncertainty about how countries will respond.

China has already retaliated and Europe has indicated it will go further.

That will compound the problems for the global economy and undoubtedly send shivers through the markets.

Much is yet to be determined, but if there’s one thing markets hate, it’s uncertainty.

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Court confirms sacking of South Korean president who declared martial law

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Court confirms sacking of South Korean president who declared martial law

South Korea’s constitutional court has confirmed the dismissal of President Yoon Suk Yeol, who was impeached in December after declaring martial law.

His decision to send troops onto the streets led to the country’s worst political crisis in decades.

The court ruled to uphold the impeachment saying the conservative leader “violated his duty as commander-in-chief by mobilising troops” when he declared martial law.

The president was also said to have taken actions “beyond the powers provided in the constitution”.

Demonstrators who stayed overnight near the constitutional court wait for the start of a rally calling for the president to step down. Pic: AP
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Demonstrators stayed overnight near the constitutional court. Pic: AP

Supporters and opponents of the president gathered in their thousands in central Seoul as they awaited the ruling.

The 64-year-old shocked MPs, the public and international allies in early December when he declared martial law, meaning all existing laws regarding civilians were suspended in place of military law.

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More on South Korea

The Constitutional Court is under heavy police security guard ahead of the announcement of the impeachment trial. Pic: AP
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The court was under heavy police security guard ahead of the announcement. Pic: AP

After suddenly declaring martial law, Mr Yoon sent hundreds of soldiers and police officers to the National Assembly.

He has argued that he sought to maintain order, but some senior military and police officers sent there have told hearings and investigators that Mr Yoon ordered them to drag out politicians to prevent an assembly vote on his decree.

His presidential powers were suspended when the opposition-dominated assembly voted to impeach him on 14 December, accusing him of rebellion.

The unanimous verdict to uphold parliament’s impeachment and remove Mr Yoon from office required the support of at least six of the court’s eight justices.

South Korea must hold a national election within two months to find a new leader.

Lee Jae-myung, leader of the main liberal opposition Democratic Party, is the early favourite to become the country’s next president, according to surveys.

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