Pentagon Pressed to Probe SpaceX Over Secret Chinese Ownership Concerns

 Two leading Democratic senators have called on the Pentagon to launch an immediate investigation into SpaceX, citing alarming reports that Chinese investors may have secretly acquired stakes in the aerospace giant.  

In a letter sent Thursday, February 5, 2026, to Defense Secretary Pete Hegseth, Senators Elizabeth Warren (D-Mass.) and Andy Kim (D-N.J.) warned that foreign capital—specifically from China—may have been funneled into Elon Musk’s rocket company through offshore shell entities. The lawmakers argue that such investments could violate U.S. national security regulations and expose critical American defense infrastructure to an adversarial power.  

The Allegations: Shell Companies and Hidden Capital

The core of the senators' concern lies in the opacity of private equity markets. According to the letter, media reports and recent court testimony suggest that investors with ties to the Chinese government may have routed funds through the Cayman Islands and the British Virgin Islands to mask their purchase of SpaceX shares.  

“These ties could pose a national security threat, potentially jeopardizing key military, intelligence, and civilian infrastructure,” the senators wrote. They specifically referenced testimony from investor Iqbaljit Kahlon, who reportedly admitted in court proceedings that routing Chinese capital through offshore entities was a method used to make the risks of foreign investment “acceptable.”  

Because SpaceX remains a privately held company, it is not subject to the same public disclosure requirements as publicly traded firms like Tesla. This lack of transparency, the senators argue, creates a blind spot where foreign adversaries could quietly buy influence or access to one of the Pentagon’s most vital contractors.

National Security Risks and FOCI

SpaceX is not merely a commercial launch provider; it has become a backbone of U.S. national security. The company holds billions of dollars in government contracts, launching sensitive spy satellites for the National Reconnaissance Office (NRO) and operating the Starshield network—a militarized version of Starlink designed specifically for government use.  

Senators Warren and Kim warned that any level of Chinese ownership could trigger the Pentagon’s rules regarding Foreign Ownership, Control, or Influence (FOCI). FOCI regulations are strictly enforced for defense contractors to prevent:  

Unauthorized Access: Foreign investors gaining access to classified information, proprietary technology, or sensitive supply chain data.

Influence over Operations: Adversaries potentially influencing company decisions, such as where and when satellite services are deployed during geopolitical conflicts.

“If Chinese intelligence or military-linked entities have a financial foothold in SpaceX, the risk of technology transfer or operational compromise is unacceptable,” said a national security analyst familiar with FOCI protocols. "The Pentagon needs to know exactly who owns the company that carries its most sensitive payloads."

The Musk Factor: Tesla and xAI

The demand for a probe comes against a backdrop of increasing scrutiny regarding Elon Musk’s business empire. Musk’s electric vehicle company, Tesla, relies heavily on China for both manufacturing and consumer sales, raising perennial questions about Beijing’s potential leverage over the billionaire.

The senators also flagged SpaceX’s recent acquisition of xAI, Musk’s artificial intelligence venture. They argue that combining a rocket company, a global satellite internet network, and an advanced AI model under one roof—potentially with Chinese financial backing—amplifies the security risk. The integration of AI into military systems is a priority for the Department of Defense, and the prospect of foreign adversaries having even indirect insight into these algorithms is a red line for lawmakers.  

Broader Geopolitical Context

This investigation request is not an isolated event but part of a growing friction between SpaceX’s commercial interests and U.S. strategic goals. Previously, lawmakers have questioned SpaceX regarding the availability of Starshield services in Taiwan. Concerns have persisted that Starlink coverage around the self-governing island—claimed by China—has been restricted or inactive, potentially to avoid angering Beijing.  

While SpaceX has stated it complies with all U.S. government contracts, the suspicion that Musk’s commercial ties to China could bleed into his defense obligations drives much of the anxiety on Capitol Hill.

Next Steps

The letter poses 11 specific questions to the Department of Defense, demanding to know the extent of any known Chinese ownership in SpaceX and whether the company is currently subject to FOCI mitigation requirements. Senators Warren and Kim have requested a full response by February 20, 2026.  

If the Pentagon confirms that Chinese funds have permeated SpaceX’s cap table, the consequences could be severe. The government could force a divestment of those shares, impose strict informational firewalls, or, in an extreme scenario, review SpaceX’s eligibility for certain classified contracts.

As of Friday, SpaceX has not issued a public comment regarding the letter. However, with the deadline looming, the Pentagon will soon be forced to clarify whether the wall between American space dominance and Chinese capital is as solid as it seems.