This is not true. Taiwanese investment in China is considered 'external'. And Taiwan's talent reserve is no way to be considered as on par against mainland China. But that is not the point either, I think YC just wants an entity in China, not for the talents, but for the market. Under the risk of being downvoted, I have to say China has created some world class startups in the past decade, only second to US.
Also speaking of world class, have you heard of DJI?
Not trying to move the goalpost, but DJI is more of a hardware company, it isn't really an internet one. Any company that can operate outside of a services model will do just fine in China, since they are just shipping product for export.
Also aren't we talking about tech company? Not internet company alone?
Or do you consider a market closed off if no foreign internet service company is doing well? In that standard US is also closed off because I can't think of a single successful non US internet company here.
But take the typical YC startup business models, most of those aren't going to be in those safe categories.
Also AWS China is a huge deal.
Isn't it the case already? In our company, the preference to host an overseas talent always goes to China's office for simplicity of immigration process. Secondary to that, I have to admit, is the significantly reduced chance of hostile talent poaching.
What was the reason you left China?
BTW. Ever crosses paths with Shanghai Bill of Slashdot fame?
2. Most of us left because of the really really bad pollution. You can’t have kids breathing that.
3. I was based in Beijing, not Shanghai.