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Musk’s China charm offensive yields Tesla tax break, publicity

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Tesla Inc CEO Elon Musk and Alibaba Group's Executive Chairman Jack Ma attend the World Artificial Intelligence Conference (WAIC) in Shanghai, China, August 29, 2019.

[BEIJING] Elon Musk‘s charm offensive in China appears to have paid off.

The billionaire chief executive officer of Tesla Inc won a tax exemption for the electric-car maker, got to promote his ground-digging Boring Co passion project and even drew praise on social media for his frugal food and accommodation choices - he was spotted eating dumplings and staying at the Holiday Inn.

Mr Musk began making headlines in China on Thursday, when he publicly sparred with Alibaba Group Holding Chairman Jack Ma at the World Artificial Intelligence Conference in Shanghai, talking about various subjects ranging from the existence of aliens to the preservation of human consciousness and other visions of the future.

Mr Musk also toured a factory Tesla is building in the country and reportedly met China's Transport Minister Li Xiaopeng on Friday. Later that day, China announced Tesla cars will be exempted from a 10 per cent purchase tax, something typically reserved for domestic makers of electric vehicles.

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Tesla currently imports all of the cars it sells in China but plans to start making the Model 3, its top-selling vehicle, at the new plant later this year. Its shares jumped as much as 4.8 per cent after news of the tax break.

China's concession to one of America's most high-profile companies stood out as it came amid heightened uncertainty as to where the trade war between the two countries is headed. President Donald Trump last month ordered US companies to immediately begin looking for alternatives to China, only to later suggest that tensions were cooling.

On Sunday, the US slapped tariffs on roughly US$110 billion in Chinese imports, prompting China to retaliate by rolling out higher levies on about US$75 billion of US goods in stages.

China plans to resume a suspended extra 25 per cent duty on US cars on Dec. 15, with another 10 per cent on top for some vehicles. With existing general duties on autos taken into account, the total tariff charged on US-made cars would be as high as 50 per cent.

That gives extra reason for Mr Musk, who during his China trip praised the nation's lead in global electric-car production, to begin manufacturing in the country soon while staying in the good graces of the Chinese government.

And although he didn't get to announce the launch of Boring Co in China during this trip - as he indicated he would in August in a tweet - Mr Musk got to pitch his ideas to some local heavyweights. He met Xiao Yaqing, head of China's State Administration for Market Regulation, and got to share his vision of the project before he left.

But not before trying some of the local delicacies. The billionaire, who has his share of fans in China, was spotted waiting in line with his team to order and dine at a local restaurant, where an order of six dumplings costs 6 yuan.

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