Chinese regulators are imposing new restrictions on the country’s tech companies, including some of the most important artificial intelligence startups, preventing them from accepting U.S. capital without explicit government approval.
As reported by Bloomberg, the measure represents Beijing’s broader response to Meta Platforms’ acquisition of the startup Manus. And just recently, also reported by Bloomberg, China has imposed the cancellation of the deal.
The goal of the Chinese authorities, according to Quartz, is to protect national security and prevent the leakage of strategic technology to geopolitical rivals, amid growing tensions between the two superpowers.
The directive: no U.S. funds without Beijing’s approval
According to sources cited by Bloomberg, agencies such as the National Development and Reform Commission (NDRC) have communicated in recent weeks to several private companies to reject capital of U.S. origin in funding rounds, unless explicitly approved by the government.
Among the companies involved are AI pioneers like Moonshot AI – which is considering an initial public offering – and StepFun. ByteDance, the parent company of TikTok and one of the most valuable Chinese startups, has also received similar instructions: any secondary sale of shares to American investors will require Beijing’s green light.
Moonshot AI, based in Beijing, is seeking to raise up to $1 billion in a round that would value it around $18 billion.
StepFun, a Shanghai rival, is instead dissolving its foreign entities and repatriating capital to comply with “red chip” regulations – companies registered abroad that host Chinese activities – and is considering a $500 million IPO in Hong Kong.
The new measures add to Beijing’s decision to block red chip listings in Hong Kong, risking to disrupt a foreign capital raising model established for two decades.
The overall intent is to prevent U.S. investors from acquiring stakes in sensitive sectors where national security is a priority.
The Meta-Manus acquisition
The new clampdown arises directly from Meta’s acquisition of the startup Manus, announced in December and valued at around $2 billion, now canceled by Beijing authorities.
The deal immediately triggered a multi-agency investigation led by the NDRC and the Ministry of Commerce on possible violations of foreign investment and technology export regulations.
Although incorporated in Singapore, Manus was founded by Chinese nationals Xiao Hong and Ji Yichao and maintained operational roots in China; the transfer of the team and knowledge raised criticism for the loss of a strategic asset to a geopolitical rival.
The co-founders have been barred from leaving the country, according to the Independent.
Geopolitical context
The Chinese move comes alongside similar restrictions imposed by the United States. As Bloomberg recalls, Washington already introduced rules in 2025 to limit American investments in Chinese companies active in semiconductors, quantum computing, and AI, fearing to strengthen Beijing’s military and economic power.
For years, China had instead encouraged its most ambitious companies to seek partnerships and capital abroad, including American funds from pension funds and universities.
The success of phenomena like DeepSeek in 2025 had pushed many global allocators to reassess the country. Today, however, concerns about technology “leakage” have pushed regulators to reverse course.
Consequences for the Chinese tech sector
These restrictions risk further isolating the recovering Chinese tech sector from the U.S. venture capital that has supported it for twenty years.
The post-Manus debate has seen academics and observers lament the loss of a valuable asset and fear a ripple effect on other startups. It remains uncertain what further actions Beijing will take at the end of the ongoing investigation. Meanwhile, government approval becomes a central variable in the business strategies of Chinese AI companies, in an increasingly stringent regulatory environment on both sides of the Pacific.
