BEIJING/SINGAPORE, April 27 (Reuters) – China ordered this Monday that Meta reverse the acquisition of artificial intelligence startup Manus, valued at more than US$2 billion, at a time when the country intensifies scrutiny on North American investments in domestic cutting-edge technology startups.
The move by the National Development and Reform Commission highlights China’s commitment to preventing U.S. companies from acquiring AI talent and intellectual property, even as Washington seeks to cut off Chinese technology companies’ access to advanced U.S. chips.
The office of the commission responsible for reviewing the security of foreign investments stated that it ‘will prohibit foreign investment in Manus in accordance with laws and regulations, and will require the parties involved to reverse the acquisition transaction’.
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The statement did not mention Meta or other foreign investors in Manus.
The move comes ahead of a planned mid-May summit between US President Donald Trump and his Chinese counterpart Xi Jinping in Beijing. China’s Ministry of Commerce had announced an investigation into the operation in January, days after Meta completed the acquisition of the startup in December.
Manus investors left the company after Meta’s acquisition, three sources familiar with the matter said. China rarely requires the cancellation of corporate deals after they are completed, demonstrating increased regulatory oversight amid U.S.-China technology competition.
Manus’ two co-founders, chief executive Xiao Hong and chief scientist Ji Yichao, were summoned to Beijing for talks with regulators in March and subsequently banned from leaving the country, five sources familiar with the matter said.
Xiao and Ji did not respond to Reuters’ requests for comment.
After receiving a US$75 million investment led by North American venture capital firm Benchmark in May 2025, Manus closed its offices in China in July, laying off dozens of employees.
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It then moved its operations to Singapore without seeking approval from Chinese regulators, people familiar with the matter said.
This allowed Manus’ parent company, Butterfly Effect, to reincorporate in Singapore and bypass U.S. investment restrictions for Chinese AI companies, as well as Chinese regulatory restrictions on transferring intellectual property and capital from domestic AI companies abroad.
The Manus team has already moved to Meta’s offices in Singapore, and projects are proceeding despite exit bans imposed on the two executives, two sources familiar with the matter said.
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China’s request to scrap the Manus deal is the most recent and high-profile case of the country blocking a cross-border transaction.
