China bars tech firms from U.S. investment without approval

China will require state approval before domestic technology companies accept investment from U.S. sources, regulators told startups and larger platforms this month. The National Development and Reform Commission has instructed companies such as Moonshot AI and StepFun, and has also told ByteDance not to permit U.S. investors to buy shares without explicit government clearance.

The guidance has been issued in recent weeks by several state bodies, with the National Development and Reform Commission taking the lead and the Ministry of Commerce participating in reviews. Officials told affected firms they should reject secondary share sales and other forms of U.S. capital unless the government grants approval.

Regulators opened a broader inquiry after a December announcement that a foreign company planned to acquire Manus for roughly $2 billion. Authorities are examining whether the transaction violated foreign investment rules or involved the export of technology that must be controlled.

The review places the National Development and Reform Commission at the center of a cross-agency process that assesses foreign financing and technology transfers. The new guidance also tightens rules on red-chip companies-mainland firms incorporated overseas-seeking listings in Hong Kong, removing a common route for raising foreign capital.

The policy affects a funding pipeline that included large flows from U.S. pensions, endowments and venture funds over the past two decades. Those capital sources provided financing for hiring, product development and overseas expansion for many Chinese technology companies.

Officials coordinating the Manus-related review are focused on potential breaches of foreign investment regulations and on whether technology tied to the deal left the country in ways that violated export controls. Multiple agencies are coordinating scrutiny of transactions involving foreign buyers or foreign-backed financing.

At the same time, foreign automakers are advancing new products and software in China. General Motors’ Cadillac unit introduced the VISTIQ, a three-row electric SUV developed with Chinese autonomous-driving startup Momenta. The model offers advanced driver-assist features for highways, city roads and self-parking and is priced at 468,000 yuan for the base model and 508,800 yuan for an upper trim.

Will Stacy, vice president of Cadillac China, said, “We have plans to really build this brand and return to where we used to be in terms of volume and market share.”

Hyundai formally launched its all-electric IONIQ brand in China as part of a local expansion. Volkswagen announced plans to add AI-powered voice control to its cars in China later this year and showed a new model developed with Xpeng called the ID. UNYX 09.

Thomas Ulbrich, Volkswagen China’s chief technology officer, described the company’s goal for in-car software as creating a system that “feels like a companion,” while saying the AI agent will use technology from Tencent, Alibaba and Baidu to predict driver needs.

The new approval requirements and restrictions on red-chip listings limit several channels for U.S. capital to reach Chinese tech firms and increase regulatory review of foreign investment and technology transfers. Companies seeking U.S. equity or foreign funding will now face additional government clearance and tighter oversight.