China Blocks Tech Firms from US Funding Without Approval
China's government now requires approval for tech companies seeking US capital. The National Development and Reform Commission, known as NDRC, recently directed multiple private firms to turn down American funding during their investment rounds. This step aims to control foreign investments in sensitive sectors.
NDRC Issues Directives to Key Players
Bloomberg reports that NDRC contacted several companies in recent weeks. Among them, AI startups Moonshot AI and Stepfun received orders to decline US money. ByteDance, the parent of TikTok, also falls under these instructions, sources close to the matter confirm.
The NDRC plays a central role in China's economic planning. Established in 1952 and reformed multiple times, it coordinates development policies across industries. In tech, it enforces rules on investments to protect national interests, especially in areas like artificial intelligence.
Moonshot AI has gained attention for its large language models, including the Kimi chatbot launched in 2023. Stepfun focuses on advanced AI models and has raised funds from domestic investors. ByteDance, founded in 2012 by Zhang Yiming, operates TikTok globally and employs thousands in AI research.
Catalyst: Meta's $2 Billion Manus Deal
This policy shift stems from Meta's acquisition of AI startup Manus for $2 billion, announced in late 2025. Manus operated from Singapore, but its founders held Chinese nationality. Beijing launched a probe into the transaction for possible violations of foreign investment and tech export laws.
Chinese observers criticized the sale as transferring critical AI capabilities to a strategic competitor. Meta, formerly Facebook and led by Mark Zuckerberg since 2004, has invested heavily in AI through tools like Llama models. The Manus deal highlighted risks of tech flowing overseas without oversight.
Potential Impact on China's Tech Ecosystem
Stay ahead of the AI curve
The most important updates, news, and content — delivered weekly.
No spam. Unsubscribe anytime.
These measures may limit access to Western venture capital for China's tech industry. US investors have poured billions into Chinese AI and tech firms over the years. Restrictions could push companies toward domestic funding sources amid ongoing US-China tensions.
Tensions escalated with US export controls on chips since 2022, affecting firms like Huawei. China responded with its own safeguards on strategic technologies. The NDRC's actions fit this pattern of tightening controls on cross-border deals.
Private companies must now seek explicit permission before accepting US funds. This applies to financing rounds involving American venture firms or investors. Sources indicate the guidance came verbally in meetings, signaling a firm stance from regulators.
Context of Broader Tech Restrictions
China maintains strict capital controls and reviews foreign investments in tech. The cybersecurity law of 2017 and data security rules since 2021 set precedents. Recent cases involved scrutiny of deals with US parties to prevent tech leakage.
Manus specialized in AI applications, drawing interest from global buyers. Its Singapore base did not shield it from Beijing's reach due to founders' origins. Similar probes have targeted other offshore entities with Chinese ties.
The policy underscores Beijing's priority on self-reliance in AI. Domestic giants like Baidu, Alibaba, and Tencent lead investments, but startups seek global capital for growth. Reduced US inflows might slow expansion for firms like Moonshot AI and Stepfun.
ByteDance faces added pressure with TikTok bans debated in the US. Its AI unit has developed models rivaling OpenAI's. Rejecting US funds aligns with directives to safeguard proprietary tech.
This development closes another channel for Western money into China's tech scene. Companies adapt by courting local investors and sovereign funds. Observers watch for formal rules codifying these verbal instructions.
Related on Neura Market