Reporting by Abu Sultan and Kritika Lamba from Bengaluru, with editorial oversight by Shinjini Ganguli.

China is telling top tech firms and AI startups, including Moonshot AI and StepFun, to reject US investment unless the government approves, signaling tighter national security controls over sensitive technologies.

ByteDance also faces a requirement that any secondary share sales to U.S. investors receive clearance, expanding the scope of oversight to major Chinese platforms.

The new restrictions risk isolating China’s recovering tech sector from traditional venture funding, which has heavily relied on American capital, even as Beijing tightens overseas listings for red-chip firms seeking Hong Kong or other markets.

Key players cited include Moonshot AI, Zhipu AI, MiniMax, Manus AI, and Meta’s Llama models, along with DeepSeek-R1 and DeepSeek V4-Pro, underscoring China’s showcase of homegrown capabilities.

TipRanks highlights notable Chinese stocks, noting NetEase as having the largest upside potential among the covered names.

Bloomberg News first reported the move, citing unnamed sources; Reuters has not independently verified the report at publication.

Reuters could not immediately corroborate Bloomberg’s account, indicating information remains from sources familiar with the matter.

Beijing is coordinating across multiple agencies, including the NDRC and the Ministry of Commerce, to assess and implement actions related to the Manus deal and its fallout.

Regulators and parties such as the NDRC, the Chinese Embassy in Washington, StepFun, ByteDance, Meta, and Moonshot AI did not immediately respond, and U.S. agencies reportedly stayed silent as well.

The actions appear reciprocal, potentially setting up a cycle of cross-border retaliation that could chill foreign investment and push more funding for Chinese AI through domestic channels.

Regulators cited include the NDRC, with no official Chinese government comment available yet, leaving policy details to be clarified in follow-up announcements.