Recently, the Chinese authorities have launched an investigation into domestic artificial intelligence enterprises. According to sources within the industry, the authorities are not only restricting the outbound travel of core research personnel but also conducting in-depth investigations into the cross-border cooperation, overseas financing, and research details of AI enterprises. They are concerned about foreign companies “overly” participating in technology development and financing, with some executives being banned from leaving the country, effectively becoming “technological hostages”.
One Chinese industry insider told reporters that with the implementation of the new version of the “Cybersecurity Law,” the authorities have initiated large-scale compliance reviews and security assessments of domestic artificial intelligence (AI) enterprises. This move aims to integrate large-scale model development into the so-called national security governance system to ensure the autonomous and controllable flow of core technology and data.
This “technology closing-off” trend is reportedly preventing the transfer of China’s AI core technology by entrepreneurs overseas. Luo Jianxiong (pseudonym), engaged in artificial intelligence research, revealed that a friend’s AI company owner was recently notified to provide the company’s plans and future forecasts.
“I know that they are conducting surveys on artificial intelligence companies in questionnaire form. In name, it is to ‘understand the direction,’ but in reality, they want to know if the company has any ‘intention’ to cooperate with foreign enterprises or if it is receiving support from foreign funds. It is estimated that companies involved in artificial intelligence research will receive similar inquiries.”
Zhejiang artificial intelligence researcher Mr. Yu stated, “In the past two years, China has made progress in the field of AI and robotics applications. However, the underlying technology still heavily relies on overseas sources. The authorities are tightening technology outflows due to concerns about the transfer of core achievements overseas.”
Mr. Yu mentioned that the authorities’ investigation is not just a simple statistics collection but the establishment of a “political early warning system” to identify so-called risky enterprises in advance. “As long as companies dare to align with the international technology ecosystem, they may be classified as potential ‘defectors,’ subject to immediate surveillance.”
Another industry practitioner, Xiao Yang, expressed that the actions of the authorities are extremely hypocritical. “Officially under the guise of ‘assisting enterprise development,’ they are snooping around for details of cross-border cooperation everywhere. For companies that have already entered the international market, the authorities will use ‘national security’ as a pretext to intimidate, demanding that they do not share any core code with foreign parties, pressuring companies to abandon the international market and rely on official ‘financial support’.”
According to Xiong Ji (pseudonym), an expert familiar with relevant policies, the Communist Party of China’s regulatory thinking has undergone a qualitative change. “Compared to previous years, the current focus of the authorities is no longer on the company’s place of registration, but on absolute control of technology, data, and decision-making power. I heard that key personnel of AI companies require permission from the relevant department to leave the country, and if the CCP perceives potential for the core capabilities to deviate from its control, they will try to control you. I also heard that the government symbolically subsidizes these companies and sends people to supervise them.”
One of the most representative cases is the general-purpose AI agency company Manus. According to a previous report by the British Financial Times, when the company attempted to make overseas structural adjustments and planned to accept a $2 billion premium acquisition by the U.S. technology company Meta Platforms, it was blocked by the Chinese Communist Party.
In March this year, Manus CEO Xiao Hong and chief scientist Ji Yichao were forcibly interrogated by the National Development and Reform Commission of the Chinese Communist Party.
Sources revealed that both of them were explicitly prohibited from leaving mainland China, effectively becoming “technological hostages.” The CCP’s regulatory agencies not only rigorously reviewed whether the transaction involved “technology transfer,” but they also used foreign direct investment regulations as a shackle to forcibly interrupt normal international business mergers and acquisitions by enterprises.
Regarding Beijing’s almost “abduction” style of regulatory measures, a senior researcher at the Washington think tank Center for Strategic and International Studies (CSIS) commented, “The CCP is trying to build walls within the code of globalization. Restricting scientists from leaving and intervening in business mergers not only disrupts basic business rules but also declares to the world that all technological achievements within China are primarily the ‘property of the Party,’ rather than the advancement of human civilization. This variant of ‘hostage diplomacy’ is turning China into a technological island.”
Mainland network engineer Mr. Yuan also confirmed the aforementioned situation. He said that the authorities recently conducted investigations on some promising artificial intelligence companies, “They seem to be checking whether artificial intelligence companies intend to relocate overseas, such as to Singapore, Malaysia, and whether they are receiving support from foreign companies. Some companies have already planned to move their headquarters abroad to avoid trouble.”
With the development of artificial intelligence in the industry, the Chinese authorities believe that the achievements independently developed by Chinese companies should “serve the country’s construction.” Some interviewees said that executives of companies engaged in artificial intelligence research have been summoned, demanding them to “love the country” and “bring glory to the nation”.