On June 1, the State Council officially announced the “Regulations of the State Council on Outbound Investment” (State Council Order No. 837), consisting of 34 articles, effective from July 1, 2026. The new rules apply to all outbound investment activities by domestic enterprises, other organizations, and resident individuals, with three major tightenings: First, strengthening national security review of outbound investments, making clear that reviews will be conducted on outbound investments and related equity transfers that affect or may affect national security; those who refuse to cooperate may be banned from engaging in outbound investment for 1 to 3 years. Second, blocking channels for “disguised technology exports,” explicitly prohibiting the transfer of technologies, services, and data restricted or banned from export to overseas entities through cross-border deployment of technical personnel, organizing training, or providing technical guidance. Third, adding a countermeasure clause authorizing the inclusion of foreign organizations and individuals that take discriminatory measures against Chinese enterprises, as well as “organizations actually controlled by or participating in their establishment or operation,” on a countermeasure list and imposing corresponding restrictions.
The new regulations were directly prompted by the “Manus case.” In December 2025, Meta announced its acquisition of AI startup Manus (whose operating entity had previously relocated from mainland China to Singapore) for approximately US$2 billion, triggering a compliance review by the Ministry of Commerce, with the two founders briefly restricted from leaving China. On April 27, 2026, the National Development and Reform Commission ordered the dissolution of the acquisition on national security grounds, marking the first time China publicly used its foreign investment security review mechanism to dismantle a completed cross-border AI acquisition. The new regulations institutionalize the previous case-by-case penetrating review through legislation, clarifying that regardless of whether an enterprise has completed overseas restructuring, the export of Chinese-origin technologies and equity transfers remain subject to constraints, filling a legal regulatory gap. According to Reuters, this move mirrors the continued tightening of U.S. AI chip export controls, signaling a further escalation of two-way investment controls in frontier technologies between China and the United States.