Several Chinese AI startups, including Moonshot AI, DeepRoute.ai, and StepFun, are reportedly dismantling their foreign corporate structures and registering directly in China, according to The Information.
The move signals a broader shift as Beijing tightens control over strategic technologies amid rising geopolitical tensions. These startups currently operate through offshore holding companies, similar to tech giants like Alibaba, ByteDance, and Tencent, which are registered in the Cayman Islands. The restructuring follows a warning from China's securities regulator that foreign-based IPOs could face stricter approval, partly triggered by Beijing's block of Meta's attempted acquisition of AI startup Manus.
Moonshot AI, the company behind the Kimi chatbot, is already in talks with lawyers about restructuring as it closes a funding round at an $18 billion valuation. StepFun has begun dissolving its foreign structure. The process is complex, taking six to twelve months, and could limit these startups' ability to raise capital from foreign investors.
The trend reflects President Xi Jinping's push to make AI a national priority, emphasizing homegrown chips, software, and basic research. It also aligns with China's aim to build a fully independent semiconductor supply chain in response to US export restrictions.
Chinese companies are increasingly relying on open-weight AI models, which are freely available and gaining global traction. However, these models often include built-in censorship, refusing to address topics such as Taiwan, Tiananmen, or Tibet. Critics also note that some performance gains in Chinese open models come from "distillation," a process where developers use outputs from powerful Western models like GPT-5 or Claude to train smaller models, replicating their behavior. The US government has accused China of using this approach to extract knowledge from American AI models at scale.