China tightens overseas deal rules, expands control over tech and data

China has drawn a sharper line around overseas dealmaking, giving itself new tools to control the movement of capital, technology, data and talent far beyond its borders. The rules, published by the State Council, take effect on July 1 and require authorization for exports of restricted Chinese goods, technologies, services or related data.

The most consequential change is legal. For the first time, Beijing has built a formal basis to force the unwinding of completed overseas transactions, not just block deals before they close. The framework also lets regulators review overseas investments and asset transfers for national security risks, order investors to dispose of shares or halt investment, and impose fines for non-compliance. That raises the cost of any transaction touching sensitive Chinese technology or data, especially for global investors who had assumed a deal could be insulated once the assets were moved offshore.

The timing points directly to the Meta-Manus case, which Chinese authorities said violated unspecified outbound investment laws. Beijing’s move signals that shifting a startup’s paper trail abroad may no longer be enough. The rules specifically ban cross-border talent transfers in sensitive sectors without approval, a direct strike at the kind of restructuring that Manus used when it moved employees and operations to Singapore before the Meta acquisition. The message to founders is blunt. As Duncan Clark, chairman of BDA China, put it: “founders will know that if you start in China, you stay in China.”

The policy also gives Beijing a retaliatory lever. Reuters said the rules can be used if foreign governments restrict Chinese investment, including by blocking unrelated foreign acquisitions of Chinese-linked entities. Han Shen Lin, China country director at The Asia Group, said the framework is “largely designed to prevent Chinese firms from divesting strategic assets to foreign parties, not to stop them from acquiring them in the first place,” and that it codifies a retaliatory toolkit against U.S. entities involved in screening Chinese capital.

That matters because the rules reach beyond mainland China and, according to Reuters, can affect deals and asset transfers in places such as Taiwan. Chris Pereira, president and CEO of iMpact, said Singapore incorporation alone does not de-risk a deal from Chinese regulatory reach. Winston Ma, adjunct professor at New York University School of Law, said Beijing is focused not only on models and AI agents, but on whether strategically sensitive technologies, data and talent are effectively transferred offshore through corporate restructuring.

The broader backdrop is a tightening two-way contest. The U.S. outbound investment program took effect on January 2, 2025, covering semiconductors and microelectronics, quantum information technologies and artificial intelligence in China, Hong Kong and Macau. Beijing’s new rules suggest it is preparing to answer that pressure with a more forceful claim over who can take Chinese assets, technology and expertise out of the country.