For decades, China has faced accusations from the United States and the European Union of stealing their technology.
From robotics and advanced semiconductors to precision engineering and automotive parts, Chinese firms have recruited top engineers, allegedly spied on Western rivals and been linked to cyberattacks aimed at gaining access to valuable trade secrets.
It is perhaps ironic, then, that China is now taking steps to prevent its own high-end technologies and talent from escaping abroad.
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China’s Great Wall around its top brains
Last week, new entry-exit rules took effect, giving Chinese authorities the power to stop engineers, founders and other specialists from leaving the country if their expertise in batteries, rare earths or artificial intelligence (AI) is judged a threat to “industrial and technological security.”
Recently, China has also tightened outbound-investment rules, cracked down on Chinese nationals holding their wealth offshore and restricted the posting of technical staff overseas.
Henry Gao, a law professor at Singapore Management University (SMU), believes that, taken together, the curbs “offer a rare glimpse into the true state of China’s economy.”
“These measures suggest that Beijing is deeply concerned about economic weakness and substantial capital outflows,” Gao told DW, adding that authorities are also determined to stop “entrepreneurs and skilled personnel from leaving the country.”
The strain on China’s economy is increasingly hard to hide. While demand for exports remains strong — especially for high-tech goods — the country’s property crash has severely weakened domestic consumption.
Bank lending fell to a record low over the summer, and new car sales in August dropped nearly a quarter year-on-year.
Beijing blocks deals, founders seek exit
The same anxiety now extends to people and money leaving. The most prominent recent example is Manus, an AI startup created by two Chinese nationals in Beijing. Last year, the company moved its headquarters to Singapore, partly to avoid US investment curbs and expand into global markets.
When Facebook owner Meta tried to acquire Manus last December for $2 billion (€1.74 billion), Beijing blocked the move and barred the firm’s two founders from leaving the country.
Just this month, Chinese social media has been awash with rumors that Huawei founder and CEO Ren Zhengfei and his daughter, CFO Meng Wanzhou, may have left the country.
The claims were picked up by Taiwanese and Indian media outlets but have not been confirmed by the tech giant and Chinese authorities. At least one family member has since appeared in public in Beijing.
Wealthy Chinese struggle to get capital out
Bloomberg Intelligence estimated that some $1 trillion in Chinese wealth had exited the country last year — the largest amount of “hot money” leaving since 2006, when records began.
Beijing has not tightened its annual $50,000 foreign-exchange quota that households may take out of the country. What has tightened, says Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis, are the unofficial routes the wealthy used around that cap.
“They haven’t changed the $50,000 quota. They are now squeezing the people and agents that money usually travels with,” Garcia-Herrero told DW.
An entire industry has grown up, in China and abroad, to help people get themselves and their capital out. Emigration agents arrange visas and relocations, while offshore brokers and trusts help Chinese nationals to park wealth overseas.
Companies sometimes use a foreign subsidiary, a listing or a staff posting to take money and know-how out together.
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New rules may spur workarounds
SMU’s Gao believes the new curbs may prove counterproductive, as the more difficult it becomes to move capital or people abroad, the greater the incentive for those with the means to find other ways out.
“Over time, that could further erode confidence, accelerate capital flight and deepen the very economic problems the measures are intended to contain,” Gao told DW.
Garcia-Herrero, meanwhile, thinks the block on talent will matter more than the squeeze on capital.
“You can still move money slowly, with approvals,” she told DW. “You cannot easily replace a process engineer who cannot board a plane — or who will not take an overseas job because of an indefinite ban.”
AI talent now needs permission to fly
The risk is already hitting China’s AI firms, which are fast catching up with their US rivals in the race to produce the most advanced AI systems.
In May, Bloomberg reported that Chinese authorities now required top AI researchers, founders and executives at firms like Alibaba and DeepSeek to obtain approval before traveling abroad.
Last year, some DeepSeek staff were asked to hand in their passports, according to tech news site The Information. Beijing has neither confirmed nor denied the practice.
Bloomberg reported in January last year that other tech engineers face similar pressure, including those helping foreign firms cut their reliance on China by building factories in Vietnam and India.
Lawyers and officials tighten legal advice
For foreign nationals, both Chinese and foreign firms sometimes disguise a working visit to China to avoid scrutiny and visa delays. They may suggest a trip is for tourism, business meetings or a factory tour rather than actual work.
Ahead of the new curbs, international law firms like DLA Piper advised companies to keep visa filings “truthful” and “complete,” warning that a mismatch between the paperwork and the actual work could now mean an entry ban of up to five years.
The new rules state that a visitor should, in principle, be told if they are banned. However, Chinese authorities may withhold notification if it “may affect national security or the investigation of criminal cases.”
In an updated travel advisory earlier this month, the US State Department went further, warning Americans to “exercise increased caution in mainland China due to … the use of exit bans without a fair and transparent process under the law, and the risk of unjust arrest or detention.”
Edited by: Srinivas Mazumdaru
