China’s Exit Bans and the End of Its Dynamism

Beijing’s Cold War with the West entered a new phase this month. The chastened creators of AI agent Manus are preparing a return to Singapore, after witnessing the forced collapse of their US$2 billion sale to Meta. Manus was originally developed in China, before its parent company relocated to the city-state. But three months after the big sale to Meta was announced, the founders were summoned back to Beijing and prevented from leaving until the deal was scrapped.

In the midst of the Manus fallout, China’s State Council issued revised exit and entry regulations. Citizens can be prohibited from travelling outside the country if authorities decide that their departure would endanger national sovereignty, industrial/technological security, or “development interests” (the last of these is an especially vague charge). Article 4 provides that citizens who endanger national security abroad will be prevented from leaving China again for three years.

Dissident Li Chengpeng says these new regulations are the latest expression of an ancient Chinese governing impulse: “Movement of the body must be controlled so that movement of the mind remains limited.” But there is another strategic reason. The Communist Party aims to stop homegrown firms like Manus from “China-shedding” and moving West. It wants to keep particular people and capital and tech inside the country’s borders. Those most capable of emigrating, of course, are the wealthy households, the scientists, the engineers, the entrepreneurs. And they are the ones whose loss would most hurt Beijing in its quest for hegemony. So they are the ones targeted by the new regulations.

That quest for hegemony remains the Party’s focus—even post-COVID, in this new and more difficult age for the Chinese nation. Only last month, state media again invoked the long-held goal of becoming shìjiè kējì qiángguó (a “world technology power”). Beijing persists with its grand plans: the Global Development Initiative, the Global Security Initiative, the Global Civilisation Initiative, the Global Governance Initiative. The theme is consistent, the ambition clear.

More desperate times, however, call for more desperate measures. China’s GDP had been growing relative to the American figure for years, and in 2021 it reached a high of 77 percent. But by 2024, it had fallen back to 64 percent. The momentum now seems to have been lost. Meanwhile, capital is flowing out of the country at a terrific rate. In 2025, China’s capital and financial accounts recorded a deficit of US$773.5 billion. Earlier this summer, Beijing overhauled rules to impose a twenty percent income tax on offshore trusts and began enforcing taxation on returns from offshore insurance policies. The CCP is growing more and more worried about all that homegrown wealth sitting outside the Party’s financial system.

The truth is that China’s dynamism is now a thing of the past. In fact, the whole phenomenon of a dynamic and rising China was itself a historical anomaly that depended on Richard Nixon’s decision to open Red China in the early 1970s and several other factors. Mao Zedong had encouraged large families in the 1960s, accidentally creating the enormous workforce of the 1990s and 2000s. Then his successor Deng Xiaoping imposed a one-child policy in 1980, accidentally ensuring that the same enormous workforce would have very few children absorbing its time and money, and would thus be primed for productivity. Finally, this productivity occurred during the great period of hyper-globalisation. That confluence of factors will not come round again. China is reverting to type.

The Communist Party cannot and will not accept that its time in the sun has passed. But the public knows. A malaise has descended over the entire nation. Journalist Dake Kang travelled across the country, gauging opinions “in cities big and small, in the countryside, in the mountains, by the sea, from Hainan to Guangxi to Guizhou to Yunnan to Sichuan.” He chatted “with restaurant and guesthouse managers, locksmiths, fishermen, farmers, barbers, masseuses, jade sellers.” And his findings were unambiguous: “Nobody feels the economy is doing well. Everyone is complaining it’s become harder to make a living.”

Since China’s downturn, a gig economy of ride-sharing drivers and delivery couriers has been soaking up surplus labour. But in cities like Shenzhen, that gig economy is now reaching saturation point—far too much supply and not enough demand. The China New Employment Forms Research Center has estimated the number of people in flexible employment to be more than 300 million, 53 million of whom work as delivery drivers or ridesharing drivers. Today, cars wait for passengers rather than the other way round. A Financial Times report found drivers sleeping overnight in their vehicles while waiting for fares.

Most Western commentators seem to be unaware of that 300 million figure, a number silently ballooning in the background of China’s AI-and-robotics success story. Indeed, those who cite Beijing’s mastery of green tech manufacturing have failed to grapple with a whole series of remarkable statistics. It’s not just the fact that the new high-end industries account for a measly 3.5 percent of GDP. It’s the sixty percent of China’s labour force who never went to high school. It’s the 900 million people living on US$10 a day in the nation’s tens of thousands of small cities and townships and villages. Scott Kennedy and Scott Rozelle portray the People’s Republic as a “slow tech dragon.” That near-billion-strong cohort, they say, is “the heavy tail weighing down an economy that might otherwise soar.”

What are these people to do? They can’t compete in the highly skilled jobs of the future, and most lack the knowledge to farm their families’ land. When it comes to wealth, the Party’s own economists estimate the country’s Gini coefficient has now climbed to 0.7—among the world’s highest, and a figure that mocks all that socialist schlock about “common prosperity.” Most of this huge cohort never had any chance of making it overseas. But the elites and middle classes are starting to leave, intuiting only too well the nation’s loss of dynamism; the hollow reality behind the façade.

There may be additional reasons for their flight—reasons that have surprisingly little to do with notions of freedom or democracy. Yaqiu Wang, researcher at the University of Pennsylvania, found that a potent catalyst is the sheer callousness of Chinese culture. Something old and cold and calculating lives in the nation’s psychology—in the social relationships that depend on deciphering hidden motives, and in the parental mindset that views offspring as insurance; a means, not an end. Wang thinks something vital is missing:

The CCP can make daily life efficient, orderly, and convenient—at least for the urban middle classes. It can compel people to follow rules and manufacture the appearance of social harmony. Yet it cannot engender human warmth.

Those fortunate enough to travel or study in the West will get a brief taste of a very different kind of society. The West is beset with its own problems, no doubt, but it is free of China’s pervasive hollow cruelty. For some, the experience prompts a permanent move.

This is a problem that calls for some nuance. First, the callousness must be learned: it was not there to begin with. Wang provides one anecdote in which a young boy and his father passed a man having a seizure at a Beijing bus stop. The son asked: “Dad, what is happening?” His father told the boy not to meddle in other people’s business, and dragged him away. Why? Because stability is everything, justice is a luxury, and drawing attention to yourself carries unacceptable risks—principles native to Confucianism and also to the current brand of Marxism-Leninism. The problem will persist until both ideologies are overcome.

Second, there are plenty who refuse to learn that callousness as they grow older. The existence of exceptions, however, does not disprove the dominant trend. And third, Chinese society is still capable of outpourings of grief and anger at the mistreatment of a stranger. Consider the case of “Iron Chain Woman” back in 2022. She was kept shackled in an outhouse and turned into an offspring machine for her husband. Public uproar forced a police investigation.

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But the anonymous cover of a mass campaign does not translate to personal encounters. Here Wang cites the phenomenon of “touching porcelain.” In ancient China, con artists would carry cheap ceramics so they could deliberately collide with strangers, shatter the item, and claim compensation far in excess of the true value. Today, the con artists collapse in public, hoping to attract Good Samaritans whose assistance can later be framed as assault. They know courts tend to side with scammers. In one such case, a couple of elderly racketeers argued that the man who took them to hospital would not have done so unless he had been at fault, because “people that good don’t exist.” The court agreed.

A society without trust is a profoundly lonely place. And a society without hope for the future is the most desperate of environments. Those with the means to escape will do so. Meanwhile, the CCP will make it more difficult for money and knowledge to pass Chinese borders, preserving assets wherever possible as Beijing slips further behind its great rival in Washington. The Party will also preserve, if it can, the old image of power and positivity: a mask that fools few in China these days, but plenty in the West.