China restricts US investment in technology firms after Meta acquisition

Chinese regulators, led by the National Development and Reform Commission (NDRC), have recently issued directives to several of the nation's most prominent technology firms to restrict US-based investment.

According to a report on Friday, high-profile artificial intelligence startups such as Moonshot AI and StepFun have been instructed to reject capital from Washington-based sources unless granted explicit government clearance.

These measures also extend to ByteDance, the Beijing-based owner of TikTok, which has been directed to halt secondary share sales to American investors without state authorisation.

Beijing intends to prevent foreign entities from gaining dominant stakes in sensitive sectors deemed vital to national security.

This sharp policy shift serves as a direct response to Meta's $2 billion acquisition of the AI startup Manus earlier this year.

The deal, which involved a company founded by Chinese entrepreneurs but incorporated in Singapore, triggered an immediate investigation by Chinese authorities into unauthorised technology exports and illegal foreign investment.

Following the acquisition, Manus executives were reportedly issued exit bans as regulators scrutinised the loss of valuable homegrown innovation to a geopolitical rival.

The NDRC and the Ministry of Commerce are now spearheading a multi-agency probe to prevent similar "exoduses" of advanced technology.

These new restrictions risk further isolating a Chinese tech sector that has historically relied on American pension funds and venture capital for growth.

For over two decades, the flow of US capital has underpinned development in internet platforms and AI; however, Beijing's current priority is to ensure that critical breakthroughs remain within domestic borders as startups pursue global expansion.