Tesla is reportedly evaluating whether to separate its China operations through a sale, spinoff, or other restructuring as it considers a possible future merger with SpaceX, according to a new report from the Wall Street Journal. The discussions reflect increasing geopolitical tensions between the United States and China, as well as the unique regulatory challenges that would arise if Tesla became part of a company with significant U.S. defense contracts. The Journal reports that people familiar with the matter say Elon Musk has spent several years organizing Tesla so that its American and Chinese businesses can operate more independently. The strategy is intended to reduce risk if relations between the two countries deteriorate further, particularly in the event of conflict involving Taiwan or tighter restrictions on trade, technology, or critical supply chains. Separating the China business could also help address concerns from both governments. Chinese regulators may be reluctant to allow a major U.S. defense contractor to oversee Tesla’s manufacturing operations, technology, and customer data in China. At the same time, SpaceX’s work with the U.S. …