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In early 2020, as the pandemic pushed it to the verge of bankruptcy, China’s highest-profile rival to Tesla Inc. was shunned by the venture capital funds and foreign investors that had powered its rise. So Nasdaq-listed Nio Inc. turned to China’s newest class of venture capitalists: Communist officials.

The municipal government of Hefei, a city in eastern China, pledged 5 billion yuan ($787 million) to acquire a 17% stake in Nio’s core business. The company moved key executives from Shanghai to the city, which is less than half the size and 300 miles inland, and began producing more vehicles there. The central government and Anhui, Hefei’s province, joined the city, making smaller investments.

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