China Tightens Control Over Capital Flows and Overseas Tech Deals

The Government of China has implemented a series of aggressive measures to restrict the movement of capital and strategic technology across its borders. On May 22, 2026, the China Securities Regulatory Commission and seven other agencies launched a crackdown on offshore brokerage platforms, including Futu, Tiger Brokers, and Longbridge. The campaign prohibits mainland investors from opening new positions or transferring funds into these accounts, forcing a two-year rectification period where investors may only sell holdings and withdraw funds. Proposed penalties include 1.85 billion yuan for Futu and over 400 million yuan for Tiger Brokers.

Following the brokerage crackdown, the State Council issued new regulations on June 1, 2026, to tighten oversight of overseas deals involving Chinese investors, data, and technology. Effective July 1, the framework allows Beijing to force the unwinding of completed overseas transactions and conduct security reviews of asset transfers. This follows a recent order for Meta Platforms Inc. to unwind its acquisition of the AI startup Manus, which Beijing claimed violated foreign investment laws.

The new rules specifically ban unauthorized cross-border talent transfers in sensitive sectors to prevent the practice of Singapore-washing. Additionally, the State Council authorized retaliation against foreign firms if their home countries restrict Chinese investment. Together with supply chain security decrees from April, these actions aim to prevent the divestment of strategic assets, counter Western sanctions, and redirect investment toward state-approved channels.