By David Shepardson

WASHINGTON (Reuters) – The top Democrat on the House of Representatives Appropriations Committee stated on Friday that Republicans in Congress are protecting Elon Musk's Chinese investments by eliminating provisions that would restrict U.S. investments.

Representative Rosa DeLauro wrote in a letter that Musk, the CEO of Tesla (NASDAQ:TSLA), may have manipulated the government funding process to remove a provision that would regulate U.S. investments in China. She noted Musk’s "extensive investments in China in key sectors and his personal ties with Chinese Communist Party leadership" raised questions about his opposition to the original funding deal.

Tesla did not immediately respond to a request for comment. Musk took to X to voice his criticism of DeLauro, posting messages including one suggesting she should be "expelled from Congress!"

President-elect Donald Trump has appointed Musk to co-lead a project aimed at cutting government costs. Musk led the online opposition to a government funding bill that initially included restrictions on Chinese investments.

DeLauro remarked, “Musk’s investments in China and his ties with the Chinese Communist Party have only increased in recent years, especially with Tesla’s Shanghai plant producing about 50% of Tesla’s global automobile output.”

She noted that nearly a quarter of Tesla’s global revenue in 2023 came from sales of Chinese-made vehicles produced at the Shanghai factory, and Tesla is also constructing a $200 million factory in China to manufacture large batteries crucial to its electric vehicle supply chain.

DeLauro mentioned that supporters of regulating U.S. investments in China have pushed for large battery manufacturing to be included in the technologies under outbound investment screening.

In October, the Treasury finalized new rules effective January 2, limiting U.S. investments in AI and other technology sectors in China that pose potential threats to national security.

On the House floor, DeLauro pledged to continue advocating for these provisions, stating, "This is something that simply must be done to safeguard our supply chains and our critical capabilities" and accused Musk of having "bullied Republicans into going back on their words."