China has reportedly begun ordered its leading artificial intelligence (AI) companies to stop accepting American capital. This new ‘state filter’ on funding is part of a broader crackdown aimed at preventing sensitive AI breakthroughs from falling into US hands, as per a report by Bloomberg.
It added that the directive comes from China’s agencies, including the National Development and Reform Commission (NDRC) even as regulators have privately instructed several high-profile startups to reject U.S.-based investment unless it is explicitly approved by the government.The NDRC’s new guidance has hit the biggest names in Chinese tech, including Moonshot AI, which is one of China’s “stars,” currently seeking to raise $1 billion at an $18 billion valuation, has been told to steer clear of US funding.The second is StepFun, another rising AI challenger received similar instructions to reject Silicon Valley cash. Probably, one of the biggest is TikTok-parent ByteDance for which regulators reportedly want the company to block secondary share sales to US investors without government sign-off to ensure its popular AI chatbot technology remains under domestic control.
Meta-Manus deal: A wake-up call for Beijing
The primary trigger for this stance was the $2 billion acquisition of the startup Manus by Meta, the parent company of Facebook, earlier this year.
Manus was founded by Chinese talent but incorporated in Singapore. The company created a highly advanced AI agent capable of automating complex financial and business tasks. The deal sparked a firestorm in Beijing with critics and academics called out the loss of valuable technology to a geopolitical rival.According to the Bloomberg report, for over two decades, the growth of the Chinese tech sector has been fueled by American pension funds and venture capital.
However, Beijing is now prioritising national security over easy cash.By restricting “red chips” – Chinese companies incorporated overseas – from launching IPOs in Hong Kong and requiring a “government green light” for funding rounds, Beijing is effectively dismantling the old playbook that helped its companies go global. Reportedly, regulators are now deeply worried about “technology leakage” as Chinese founders explore international markets.
