From SpaceX to Meta: The geopolitics of who gets to invest

(Edited and refined by Candice Chan, with the assistance of AI translation.)

In the run-up to the highly anticipated initial public offering (IPO) of SpaceX, underwriters were reportedly instructed not to accept orders from investors in mainland China and Hong Kong, while users from those jurisdictions were restricted from accessing the SpaceX website and IPO information.

On the surface, this was a cautious response to US export controls and defence-related regulations. In reality, however, it reflects a broader shift: amid intensifying technological and security competition between the US and China, global capital flows have entered a new phase characterised by heightened sensitivity and uncertainty. Rather than a comprehensive “decoupling”, what has emerged is a form of “selective de-risking” focused on a handful of sensitive sectors such as space, semiconductors and artificial intelligence (AI), where thicker firewalls have been erected, while extensive economic and commercial ties have continued in less sensitive areas.

It is important to emphasise that SpaceX, as a defence-sensitive enterprise, operates rocket and satellite technologies that are subject to stringent controls under the US International Traffic in Arms Regulations (ITAR). Both the issuer and the underwriters seem to have adopted an approach of “compliance in advance”, using ITAR’s classification of “restricted regions” as a risk benchmark.

Exclusionary moves by SpaceX

Internally, mainland China and Hong Kong are treated as highly sensitive jurisdictions, leading to the drawing of a commercial red line that is even narrower than the legal requirements themselves. In this case, ITAR functions less as a regulatory framework and more as a market-internalised risk template, serving not only as a compliance basis but also, in practical effect, as one of the instruments facilitating the financial and technological decoupling of US and Chinese capital.

For capital from mainland China and Hong Kong, exclusion from the SpaceX IPO — a flagship offering representing the cutting edge of American space and satellite technology — signals a departure from the norm of the previous decade, during which Chinese capital was deeply involved in Silicon Valley’s innovation ecosystem.

An increasing number of US technology companies — particularly those operating in space, semiconductors and AI — have been proactively filtering out shareholders with Chinese backgrounds before going public, in order to reduce potential obstacles relating to future national security reviews and government contracts.

From a financial perspective, the exclusion of mainland Chinese and Hong Kong capital did not materially affect the fundraising capacity of a star asset such as SpaceX in the short term. For second-tier technology firms, however, a structurally narrower investor pool is likely to result in higher risk premiums, greater valuation divergence and more volatile liquidity.

Blocking Meta’s acquisition of Manus

If the SpaceX IPO illustrated tighter restrictions over who could invest in sensitive American assets, the controversy surrounding Meta’s proposed acquisition of Singapore-based AI start-up Manus showed the converse: who could acquire technology companies with Chinese origins and control over critical algorithms and data.

At the end of last year, Meta announced plans to acquire Manus for more than US$2 billion, hoping to strengthen its own platforms and enterprise services through Manus’s general-purpose AI agent technology. The transaction encountered little meaningful security resistance in the US, but quickly attracted close scrutiny from Chinese regulators. In April this year, China explicitly rejected the deal on national security grounds and required the parties to withdraw the acquisition proposal, citing concerns over technology exports, data security and control over critical technologies.

Notably, while the Meta-Manus controversy was unfolding, China’s State Council approved a new State Council regulation on outbound investment at an executive meeting on 17 April. The regulations were formally published in June and took effect on 1 July 2026.

The regulations constitute a foundational legal framework governing outbound investment by domestic enterprises, organisations and individual residents. They define outbound investment broadly to include activities through equity, assets, financing and guarantees that result in the acquisition of ownership, control or management rights overseas. They also introduce, for the first time in a systematic manner, outbound investment security reviews and a more detailed enforcement and penalty regime.

Observers generally interpret both the timing and content of the regulations as closely aligned with the Meta-Manus case, suggesting a clear intention to provide stronger legal grounds for preventing sensitive technologies and data from being transferred abroad through indirect channels in the future.

The regulations stipulate that outbound investors must not export or use goods, technologies, services or related data that are prohibited from export by the state. Restricted items may not be transferred without authorisation. The rules also explicitly prohibit the export of controlled technologies and data through indirect means such as dispatching technical personnel, arranging overseas employment or conducting cross-border training programmes.

For outbound investments in prohibited sectors, regulators may order activities to cease, require the disposal of assets within a specified period, confiscate unlawful gains and impose fines of up to roughly 1% of the investment amount. Violations involving filing requirements or the submission of false information may also result in substantial financial penalties and restrictions on outbound investment activities for periods of one to three years.

Setting regulatory boundaries

Many academics view these developments as marking a transition in China’s outbound investment oversight from a system largely based on administrative guidance to one defined by clearly articulated legal red lines backed by enforceable penalties. The emphasis is increasingly on more refined regulatory management integrated with national security considerations.

While such security-oriented governance may help address concerns over the outflow of sensitive technologies, it also raises an inevitable issue: under higher compliance thresholds and greater approval uncertainty, some capital and technologies that might otherwise have been allocated more efficiently through market mechanisms may instead face reduced efficiency and increased delays.

Taken together, the SpaceX IPO, the Meta-Manus controversy and China’s new outbound investment regulations reveal a clear trend: the US and China are both putting up stronger guardrails around capital flows and mergers and acquisitions.

In the first case, the US effectively screened out capital from mainland China and Hong Kong from the financing of sensitive enterprises. In the second, China imposed stricter approval requirements and retrospective oversight on the overseas expansion of its own companies and technologies.

The result is that, for businesses and investors, traditional market and compliance risks have become increasingly intertwined with geopolitical risk. A single cross-border equity or technology transaction may now face scrutiny from regulators on both sides acting on national security grounds, increasing uncertainty and extending transaction timelines.

From a legal perspective, the SpaceX case is primarily an example of self-imposed restrictions at the intersection of securities issuance and export controls. By contrast, the Meta-Manus case and the new outbound investment regulations reflect the combined use of merger control and outbound investment management tools. Yet under the overarching framework of national security, these previously distinct regulatory systems are increasingly viewed by market participants as components of a broader “geopolitical compliance ecosystem”.

Implications of regulations

In such an environment, institutional investors and corporate decision makers can no longer rely solely on static sanctions lists or regulatory assessments from a single jurisdiction. What is required instead is a more dynamic approach involving intelligence gathering, scenario planning and institutional design.

At the ownership level, companies need to consider in advance how sensitive shareholders may enter or exit. In fundraising and M&A arrangements, businesses may need to establish separate structures for operations with differing levels of political sensitivity. With respect to data and technology control, contractual and technical mechanisms will be required to clearly determine who ultimately holds decision-making authority.

The SpaceX investment restrictions, China’s intervention in the Meta-Manus transaction and the newly introduced outbound investment regulations are no longer merely news items for companies whose technologies and capital structures are deeply intertwined with both China and the US. They have become medium- to long-term strategic variables that must be addressed at board level.

These developments are also reshaping the meaning of corporate governance. For companies heavily dependent on cross-border operations and sensitive technologies, boards that fail to identify, document and communicate geopolitical and regulatory risks may find it increasingly difficult to convince investors and regulators that they have fulfilled their fiduciary and due diligence responsibilities.

What it means for Singapore

For a neutral and open economy such as Singapore, the consequences of US-China competition are unlikely to take the form of capital simply flowing westward or eastward. Instead, what is emerging is a far more complex restructuring. On the one hand, some Chinese capital that can no longer directly participate in the financing of sensitive US technology firms may seek compliant structures and alternative investment opportunities through jurisdictions such as Singapore. On the other hand, companies and talent that China considers sensitive may become more cautious in evaluating their regional footprints and control arrangements.

For Singapore’s financial centre, the challenge lies in creating, as far as possible, a clear and predictable institutional environment for compliant capital and genuine innovation, while respecting the security concerns of all parties, rather than leaving market participants to navigate a grey zone without a complete view of the landscape.

A more realistic prospect may be that Singapore benefits primarily as a hub for compliance and structural design — providing geopolitical and regulatory firewall solutions for cross-border capital, family offices, venture capital funds and private equity investors — rather than simply replacing traditional international financial centres as the principal fundraising venue for high-risk technology assets.

US-China competition is unlikely to ease significantly in the near term, making regulatory uncertainty increasingly resemble a “new normal”. The SpaceX IPO, the Meta-Manus controversy and China’s new outbound investment regulations are merely the latest pieces of a much larger puzzle. For businesses, investors and regulators alike, the ability to preserve a basic level of predictability and transparency in market rules amid rising security concerns will go a long way towards determining the resilience and vitality of the global innovation ecosystem in the years ahead.

This article was first published in Lianhe Zaobao as “美中博弈与监管不确定性的升级 ——从SpaceX到Meta–Manus”.

Related: What SpaceX’s IPO means for China | Manus quagmire: The long arm of China’s cross-border strategic reach