China has officially blocked Meta’s $2 billion acquisition of the artificial intelligence startup Manus, a decision seen as a stark warning to tech entrepreneurs regarding foreign investment in the country. This move, which invokes foreign investment security review measures for the first time since their introduction in 2020, aligns with China’s tightening control over technology transfers amidst escalating competition in the AI sector with the U.S. The timing is particularly significant as it comes shortly before U.S. President Donald Trump’s planned visit to Beijing for trade discussions. Analysts interpret the ban as a signal that tech founders operating in China will face stringent regulatory scrutiny, further complicating the landscape for Chinese tech firms attempting to reposition themselves abroad, notably through the method known as “Singapore washing.”
Meta: Meta is a U.S. tech giant known for social media platforms like Facebook and Instagram, with expanding efforts in artificial intelligence. In this case, Meta agreed to acquire AI startup Manus in December 2025 to integrate its agent technology into Meta AI, but China blocked the deal citing national security concerns over technology transfers. The company stated the transaction complied with applicable laws and anticipates resolution.
Manus: Manus is an agentic AI startup originally founded by Chinese engineers with early R&D in Beijing under Beijing Red Butterfly Technology. It relocated its headquarters to Singapore in July 2025 before Meta’s acquisition agreement, releasing an advanced AI tool in March 2025 hailed by Chinese state media as the next DeepSeek. China’s National Development and Reform Commission prohibited the deal, demanding withdrawal due to links to Chinese technology, talent, and data.
Dan Wang: Dan Wang is a director on Eurasia Group’s China team. He warned that the Manus case could divide the AI ecosystem between the U.S. and China, deterring overseas AI talent from returning.
Winston Ma: Winston Ma is an adjunct professor at NYU School of Law. He explained China’s concerns focus on preventing transfers of strategically sensitive technologies, data, and talent via offshore restructuring, emphasizing the complexity of data reversal in deal unwinding.
Duncan Clark: Duncan Clark is chairman of consultancy firm BDA China and an early advisor to Alibaba. He commented that the blocked Meta-Manus deal signals to founders that starting in China means staying in China, describing the outcome as a draconian development.
Chris Pereira: Chris Pereira is president and CEO of consulting firm iMpact. He noted that Singapore incorporation does not shield deals from Chinese regulatory reach and highlighted talent as a new front in U.S.-China competition.
Gary Dvorchak: Gary Dvorchak is managing director at Blueshirt Group. He observed that China lacks leverage over Meta due to blocked platforms and no manufacturing there, though Beijing could disrupt Manus operations to render it worthless post-merger.
`json
{
“Trend”: “Chinese tech firms like Manus are relocating to Singapore as part of a strategy to reduce scrutiny from regulatory bodies in both Washington and Beijing.”,
“Regulation”: “The National Development and Reform Commission in China used its foreign investment security review measures, introduced in 2020, to block the acquisition deal.”,
“Geopolitics”: “The blocking of the deal takes place in the context of the ongoing AI rivalry between the U.S. and China, coinciding with the upcoming visit to Beijing by the U.S. President to discuss trade and investment.”
}
`