China tightens AI FDI scrutiny

China’s top economic planner on April 27 ordered Meta to revoke its acquisition of Manus and barred foreign investment in the AI project. (en.chinadiplomacy.org.cn) (cnbc.com) The order came from the office of China’s foreign investment security review mechanism, which sits under the National Development and Reform Commission. Chinese authorities told the parties to withdraw the deal after a months-long probe. (en.chinadiplomacy.org.cn) (technode.com) Manus is an artificial intelligence startup with Chinese roots that later relocated to Singapore, and Meta had agreed to buy it in December 2025 for more than $2 billion. Analysts said the case showed that a Singapore structure did not remove Chinese regulatory reach. (cnbc.com) (forbes.com) The Manus order was not an isolated intervention. Reuters reported on April 24 that Chinese regulators had instructed several private tech companies to reject U.S. investment in funding rounds unless they received explicit approval. (reuters.com) (economictimes.indiatimes.com) Reuters said Moonshot AI and StepFun were among the companies that received that guidance, and ByteDance was told not to approve secondary share sales to U.S. investors without government clearance. The report said the aim was to stop U.S. investors from taking stakes in technologies tied to national security. (reuters.com) (economictimes.indiatimes.com) China already had a restrictive foreign investment system before this week’s AI moves. The U.S. State Department said China’s inbound foreign direct investment fell 27.1% in 2024 to $114.8 billion, and ranked it among the world’s more restrictive major economies. (state.gov) China’s 2024 foreign investment negative list says authorities can deny approvals, registration and project clearances for prohibited investments, and it says related national security measures still apply outside the list. That gives regulators room to treat frontier AI as a security issue even when a sector is not named line-by-line. (ndrc.gov.cn) The U.S. has been moving the same direction from the other side. Reuters noted Washington earlier in 2026 limited some U.S. investment in Chinese artificial intelligence, semiconductor and quantum companies on security grounds. (reuters.com) Consultants told CNBC the immediate message to founders was that sensitive Chinese technology, data and talent cannot be moved offshore simply by reincorporating in Singapore. The next deals in Chinese AI now face a political review before they get a financial one. (cnbc.com)