China imposes new rules to tighten control of overseas tech and AI investments

China's State Council issued sweeping regulations on outbound investment that will take effect on July 1. The rules expand government oversight of overseas deals involving Chinese investors, especially in technology, artificial intelligence, data and other sectors deemed sensitive to national security. For the first time, the regulations give authorities a legal basis to unwind completed foreign transactions, require authorisation for the export of restricted goods, technologies and related data, and ban cross‑border talent transfers in sensitive fields without approval – a move aimed at curbing the practice known as “Singapore‑washing”.

Investors are told they “shall not transfer goods, technologies, services and related data that are prohibited from export… by means of sending technical personnel across borders, organising personnel to work in other countries, providing technical guidance across borders, or arranging cross‑border training.” The State Council can also conduct security reviews, order investors to dispose of shares or cease investments, and impose fines. Reciprocal sanctions are foreseen, allowing China to block foreign firms if their home governments restrict Chinese investment.

The new framework follows earlier supply‑chain security decrees and comes a month after Beijing forced Meta to unwind its acquisition of AI startup Manus, an example of the tightening stance on overseas tech deals. The regulations raise compliance risks for global investors and could affect Chinese companies seeking capital abroad.