China tightens travel and capital rules for AI sector

Researchers, startup founders, and executives at private firms in China are reportedly subject to travel restrictions, with some figures required to seek government approval before heading abroad. According to The Financial Times, China has barred Manus’ two co-founders from leaving the country. This restriction comes as regulators investigate whether Meta’s $2 billion acquisition of the AI startup runs afoul of foreign investment rules. To satisfy demands to unwind the transaction, the co-founders of Manus are reportedly exploring options to buy back the company, which includes raising about $1 billion from external investors. These travel limits follow earlier warnings; in March 2025, the Wall Street Journal reported that Chinese authorities had been advising top AI founders and researchers to avoid traveling to the U.S.

In addition to restricting the movement of talent, Beijing is reportedly moving to control the flow of foreign investment. Bloomberg reported in April that China plans to keep a check on U.S. capital flowing into its top AI firms. Under these reported plans, the government would require sign-off before technology companies—specifically Moonshot AI, StepFun, and ByteDance—can accept American capital. These capital checks follow a series of economic countermeasures. In 2025, Beijing imposed export controls on 14 rare earth materials, which are a set of seventeen chemical elements critical for high-tech manufacturing. Beijing also separately barred state-funded data centers from deploying foreign AI chips.

The tightening of travel and capital controls comes as the technological gap between the East and the West continues to narrow. According to an index from Stanford, the performance gap between the top U.S. and Chinese AI models had shrunk to just 2.7% as of March 2026. This represents a significant shift from 2023, when the performance gap between the models stood at about 31%. While the U.S. still dominates in terms of model quality and high-impact patents, China is fast catching up in publications, citations, and patent volume.

Why it matters

The restrictions reflect a wider shift in how Beijing manages the brain-drain in the AI sector, which has seen skyrocketing demand for talent to train and tweak AI models as the global tech industry taps into this new avenue to seek growth.