China Denies Blocking Startup Funding as Foreign Capital Retreats from Data Centers

Chinese officials have rejected claims of restricting foreign investment in tech startups, even as capital outflows from data centers continue. Li Chao of the National Development and Reform Commission emphasized China's commitment to international collaboration and economic openness during a May 22 statement.

The rebuttal follows reports of Beijing quietly instructing domestic tech firms to avoid US funding without prior government approval. Notable companies affected include ByteDance, AI startups Moonshot AI, and StepFun. Regulatory scrutiny intensified after China blocked Meta Platforms' $2 billion acquisition of Singapore-based but China-manufactured AI firm Manus, citing national security concerns.

This 'window guidance' approach—informal directives bridging policy and administrative counsel—reflects China's tightening oversight of cross-border tech deals. Manus is now reportedly seeking $1 billion in external funding to unwind the failed acquisition.