Beijing Blocks U.S. Capital From China's AI Startups

What I Read This Week: a summary of the content that I consumed this past week…

On April 27, Meta agreed to reserve up to 1 GW of capacity from Overview Energy, a four-year-old Ashburn, Virginia company. They came out of stealth in December and are developing satellites to collect solar power in orbit and beam it down as near-infrared light to existing solar farms on the ground. Meta paired the deal with a reservation of up to 1 GW of long-duration storage from Noon Energy, backed by 100 gigawatt-hours of capacity. Orbital demonstration is planned for 2028 and commercial delivery for 2030.

Overview Energy’s satellites would sit in geosynchronous orbit, 22,000 miles above the equator, where satellites orbit at the same speed Earth rotates and stay parked above the same spot on the ground. At that altitude, solar panels receive sunlight roughly 24 hours a day, with no clouds and no atmospheric loss. The system would collect that energy, convert it to low-intensity near-infrared light, and beam it down to ground-based solar facilities that already have the inverters and grid interconnections to push electricity onto the wire.

Meta did this now because the AI compute it locked in through 2027 has no matching power lined up. Interconnection queues at ERCOT, PJM, and MISO are running 3-6 years out. A hyperscaler trying to power gigawatt-class data-center campuses on a 2028 timeline either waits for the grid, builds behind-the-meter, or finds new generation. Meta just put space on the option list. To date, Meta has contracted more than 30 GW of clean and renewable energy, from novel sources like geothermal technologies to new nuclear energy.

Through the week of April 27, it was confirmed that China’s NDRC, the country’s central economic planning agency, has instructed domestic AI companies that they must receive explicit government approval before accepting U.S. capital. The directive reached Moonshot AI, developer of the Kimi LLM, currently raising at an $18B valuation, and StepFun, another AI company with a rising valuation of $6B. ByteDance was separately told that any secondary share sale involving American buyers requires Beijing’s sign-off first.

The policy was triggered by Meta’s December acquisition of Manus, an AI agent startup, for roughly $2 billion. NDRC and the Ministry of Commerce opened a multi-agency probe into foreign investment and technology exports immediately after the deal was announced.

The NDRC said it would “prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction”. China was able to bar two of Manus’ co-founders with an exit ban from China, but the company had already moved to Singapore with employees now in Meta’s offices.

Functionally, U.S. dollars cannot now flow into Chinese AI without explicit state permission. The largest U.S. funds with Chinese AI exposure now lose secondary liquidity for those positions. The U.S.-China tech decoupling started with chips (export controls in 2022), moved to software (TikTok, app bans), and now reaches capital investments. Talent could be next. Restrictions on Chinese students at U.S. universities with visa controls and reciprocal Chinese restrictions on returnees could be on the table.

Back in the U.S., the AI capex race continues to heat up as multiple Mag7 companies beat their revenue expectations and increased their spend projections to over $700B this year on AI infrastructure.

On April 29, the Senate Banking Committee voted 13-11 to advance Kevin Warsh’s nomination as the next Federal Reserve chair. Every Republican voted yes. Every Democrat voted no. It was the first fully partisan vote on a Fed-chair nominee in the committee’s history.

The unblocking move came earlier in the week. Senator Thom Tillis, who had been holding the nomination, agreed to support Warsh after the Justice Department dropped its criminal investigation into current Fed Chair Jerome Powell on Friday, April 24. The full Senate is expected to vote the week of May 11, with Powell’s term as chair expiring May 15. Powell plans to remain on the Board of Governors as a regular Fed governor until his term ends in 2028, an arrangement no sitting chair has used since 1948.

For context, Powell’s 2022 reconfirmation was 80-19. Bernanke’s 2010 reconfirmation was 70-30. Even Greenspan’s 1996 reconfirmation drew bipartisan support. The institutional assumption underlying the Fed has been that the chair walks in with a coalition broader than the party that nominated them, which gives the chair political cover to deliver unpopular policy when needed.

The cleanest market-implied gauge of how traders read Warsh’s room to operate will be the extra yield premium on the 10-year Treasury, in expectations for inflation spikes.

It widened roughly 30 basis points since the Iran war and whether it stays there past June will tell us how Warsh’s term will begin.

All-In: Codex vs Claude, Elon vs Sam Trial, Big Hyperscaler Beats, Peptide Craze