ByteDance, AI startups require China approval for US funds

In recent weeks, Chinese regulators have told Chinese AI startups ByteDance, Moonshot AI, and StepFun to get approval before taking US money after Meta’s acquisition of Manus, an AI startup founded by Chinese entrepreneurs.

The National Development and Reform Commission gave the guidance and is leading a review with the Ministry of Commerce into the Manus deal.

ByteDance also needs approval for secondary share sales to US investors.

The move adds to Beijing’s broader push to curb foreign stakes in sectors such as AI and in offshore red-chip structures used to raise capital abroad.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

The deal that pushed Beijing to act

Meta’s roughly US$2 billion purchase of AI startup Manus helped set off the new policy response 1.
Manus was incorporated in Singapore, yet it was founded by Chinese entrepreneurs and kept operating ties in China. Officials saw the sale as a loss of AI technology to a geopolitical rival 2.
This setup is sometimes called “Singapore-washing.” Companies used it to draw Western funding while keeping their operations in China 3.
The deal led to a probe by several Chinese agencies. Manus co-founders Xiao Hong and Ji Yichao were reportedly stopped from leaving China 2.

A wider split in tech funding

The rules deepen the split between US and Chinese tech funding. They echo US limits on American investment in some Chinese AI, chip and quantum companies 1.
For years, Chinese tech firms drew US money from pension funds. Venture capital groups such as Sequoia Capital and Benchmark also backed them. New approval rules could disrupt that flow 2.
The policy also reaches offshore “red chip” structures, which Chinese companies often use to raise money overseas. AI startup StepFun is unwinding offshore entities and moving capital onshore to meet the rules. That shift can bring sizable tax costs 1.
The change could lock in a longer split. State-backed Chinese funds are likely to take a larger role at home as some global venture capital moves away from China 3.