China’s National Development and Reform Commission (NDRC) has issued guidance telling leading AI startups to reject U.S. funding unless they obtain explicit approval from Beijing. This move follows the NDRC’s decision in late April to block Meta’s approximately $2 billion acquisition of Manus, an AI agent company with Chinese origins now based in Singapore.
Background: Blocking the Manus Acquisition
On April 27, 2026, China’s NDRC ordered all parties to withdraw from the Manus acquisition, citing laws and regulations governing foreign investment, without providing further detail, according to TechCrunch and The Guardian. The deal, announced in December 2025, would have integrated Manus’s AI agent technology into Meta’s platforms.
The decision marks one of the most assertive regulatory reversals of a cross-border tech deal in recent memory and underscores heightened scrutiny of U.S.–China technology ties, say TechCrunch and The Guardian. Industry analysts suggest it signals Beijing’s firm approach to protecting AI-related capabilities as a national security asset, as reported by the Los Angeles Times and the Associated Press.
Expanded Restrictions on U.S. Investment
Following the Manus decision, Bloomberg reported that regulators are extending restrictions to other tech firms. AI startups such as Moonshot AI and StepFun—and even ByteDance regarding share sales—have been told to reject U.S. investments unless explicitly approved by Chinese authorities. This policy shift aims to curb U.S. financial influence over strategic AI technologies.
Implications for Cross-Border AI Investment
This tightening significantly raises the bar for U.S. capital flows into Chinese-linked AI ventures. Industry observers note that such measures could deter U.S. acquirers and investors, complicating dealmaking and increasing geopolitical risk in AI financing. It may also drive more startups to seek relocation or dual incorporation in jurisdictions outside mainland China, as Manus did by registering in Singapore.
Conclusion
China’s latest actions reflect intensifying geopolitical friction in the AI domain and a determined effort by Beijing to safeguard domestic technological sovereignty. By reversing the Meta–Manus deal and preemptively limiting U.S. capital flows, regulators are reshaping the dynamics of international AI collaboration and funding.