China's government has told several of the country's top AI companies they must obtain explicit government approval before accepting U.S. capital in funding rounds, according to Bloomberg. The guidance, relayed to a number of private companies over the past several weeks, came from the National Development and Reform Commission and instructs those firms to seek government sign-off before taking on any American capital, Bloomberg reported.
AI startups Moonshot AI and StepFun were among the companies that received the instructions, according to Bloomberg. ByteDance, whose TikTok app has made it the most valuable private company in China, was separately told that any secondary share sales involving American investors would require Beijing's sign-off first, according to Bloomberg.
According to Bloomberg, the core purpose of the new rules is to keep American capital out of Chinese technology fields that Beijing considers strategically sensitive. Representatives for the NDRC, Moonshot AI, StepFun, and ByteDance did not respond to requests for comment.
The policy stems from Meta $META's acquisition of AI agent startup Manus, which was announced in December and has been widely valued at about $2 billion. The deal prompted a multi-agency Beijing probe, led by the NDRC and including the Ministry of Commerce, into foreign investment and technology exports. Manus co-founders Xiao Hong and Ji Yichao had been barred from leaving China, according to Bloomberg.
The Meta–Manus deal drew scrutiny from Beijing because Manus, though incorporated in Singapore, was founded in China and maintained operational roots there. China's regulators framed their review around questions of what constitutes a technology export when the asset being transferred is a team, a system, and operational know-how — not a conventional product. Meta has said there will be no continuing Chinese ownership interest after the deal closes and that Manus will discontinue services and operations in China.
These investment curbs arrive alongside a separate Beijing initiative targeting so-called red chip structures — offshore-registered vehicles that house Chinese businesses — which regulators have moved to block from listing on the Hong Kong exchange, Bloomberg reported. StepFun, which is considering a $500 million Hong Kong float, is in the process of unwinding its overseas entities to meet those requirements, a restructuring that could carry significant tax implications.
The broader regulatory environment has made investment permissions a central variable in AI business strategy, with both Washington and Beijing tightening controls over cross-border capital flows into sensitive technology sectors. The U.S. put its own restrictions in place earlier, limiting American investment in Chinese AI, semiconductor, and quantum firms, according to Reuters.
American investment in China’s tech sector has a long history, with pension funds, university endowments, and firms like Sequoia Capital and Benchmark investing directly or through China-focused venture funds. The new approval rule could disrupt this funding for some of China’s top AI companies.