China is preparing to block major tech firms from taking U.S. money without state approval

China is tightening the gate around its technology sector and making it harder for firms to take U.S. money. The new line from Beijing is: If a Chinese tech company wants funding that comes from America, it may now need state approval first.

Bloomberg reported Friday that this policy is part of a wider reaction to Meta Platforms’ takeover of Manus. That deal was worth $2 billion earlier this year. After the December announcement, Beijing opened an investigation into possible illegal foreign investment and the export of technology.

Beijing tightens control over U.S. money entering China tech

Several state bodies have spent the past few weeks telling private firms to turn down capital from the U.S. unless officials clearly approve it first. One of the main agencies involved is the National Development and Reform Commission, a powerful planning body with broad influence over policy.

The message has already reached companies such as Moonshot AI, which is considering an IPO, and StepFun, another startup working in AI.

The same kind of limit is also being applied to ByteDance Ltd. The Beijing company owns TikTok and is still the most valuable startup in the country. It also runs one of China’s best-known AI chatbots. Regulators do not want ByteDance to allow secondary share sales to American investors unless the government signs off on it.

Beijing simply wants to stop U.S. investors from picking up stakes in sectors it sees as sensitive and tied to national security. The Manus deal pushed that fear into the open. It also put the National Development and Reform Commission at the center of a broader investigation. That review now involves several agencies, including China’s Ministry of Commerce.

This could leave China’s tech sector even more cut off from the kind of venture money that helped build it over the last 20 years. A lot of that backing came from American pensions and endowments. 

The funding pipeline mattered for growth, hiring, product development, and overseas expansion. Now the state is putting more barriers in front of it.

The pressure does not stop there. Beijing has also restricted red chips, which are Chinese firms set up overseas, from seeking listings in Hong Kong. That matters because the red-chip route helped Chinese companies raise foreign money for years by going public outside the mainland. That old playbook now looks far less reliable.

Foreign carmakers rush into China with new software and electric models

While Beijing is shutting some doors in tech finance, foreign car brands are trying to win ground in China by pushing harder on software, electric cars, and driver-assist systems. The timing is not random.

Carmakers from the U.S., South Korea, and Germany rolled out fresh plans around the Beijing auto show, which opened on Friday, as they try to fight weak sales in the biggest auto market on earth.

General Motors is trying to rebuild Cadillac’s position in China. Will Stacy, vice president of Cadillac China at GM, said, “We have plans to really build this brand and return [to] where we used to be in terms of volume and [market] share.”

On Wednesday, Cadillac unveiled its first model for China with driver-assist features. The vehicle is the three-row VISTIQ, a luxury electric SUV priced at 468,000 yuan, or about $68,000, and 508,800 yuan for a higher trim.

The VISTIQ can handle highways, city roads, and self-parking through advanced driving support software. That system was developed with Momenta, a Chinese startup focused on autonomous driving. The partnership shows how foreign brands still need local tech ties if they want to stay relevant in China.

Hyundai also made its move on Friday by formally launching its all-electric IONIQ brand in China. The Korean company is treating this as its biggest local expansion plan so far.

Volkswagen is doing the same on a large scale. On Tuesday, the German automaker said it will start adding AI-powered voice control to cars in China in the second half of the year. Thomas Ulbrich, Volkswagen China CTO, said, “The car should be like a companion.”

He also said the company’s in-car AI agent will use technology from Tencent, Alibaba, and Baidu to build a tool with “personality” that can predict what drivers need. Volkswagen also showed four vehicles in Beijing on Tuesday, including the ID. UNYX 09, which it developed with Xpeng in just two years.

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