China has reportedly ordered Meta to reverse its acquisition of artificial intelligence startup Manus, in a move that signals tightening control over strategic tech assets and escalating competition with the United States.
According to reports, the directive came on Monday from China’s National Development and Reform Commission (NDRC), which ruled that foreign investment in Manus is prohibited under Chinese law, effectively requiring the deal to be unwound.
The acquisition, valued between $2 billion and $2.5 billion, had only recently been completed in December 2025, but was placed under review in January before being intensified in March.
Chinese authorities are said to have taken a firm stance on retaining control over artificial intelligence talent, software, and intellectual property, expanding restrictions that previously focused mainly on semiconductor technology.
As part of the investigation, the co-founders of Manus, Xiao Hong and Ji Yichao, were reportedly summoned to Beijing for discussions with regulators and later restricted from leaving the country. Neither has publicly commented on the development, while Meta has also not issued any official response.
Manus gained attention in China in 2025 after launching a general AI agent system designed to perform multi-step tasks such as coding, research, and workflow automation.
The company was once viewed as a rising competitor in China’s AI ecosystem, drawing comparisons with major domestic players like DeepSeek.
Before the acquisition, Manus reportedly raised $75 million in funding led by Benchmark in May 2025. The company later shut its China offices and relocated operations to Singapore under its parent company Butterfly Effect, a move widely seen as an attempt to attract global investment while navigating regulatory pressure from both China and the United States.
However, Chinese regulators now appear to be challenging such offshore restructuring strategies, often referred to as “Singapore washing,” where startups shift legal bases abroad while maintaining operational ties to China.
The new directive suggests that authorities may now scrutinize not only where a company is registered, but also where its leadership, research, data, and technology control are based.
The reversal order could create significant operational complications for Meta, especially as reports suggest that some Manus staff had already integrated into Meta’s Singapore operations and portions of its technology were being incorporated into ongoing projects.
If enforced, the decision may require disentangling teams, contracts, and systems already merged under the acquisition agreement.
The development comes at a sensitive geopolitical moment, just weeks before a planned summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing, where trade and technology tensions were expected to feature prominently.
Analysts note that while China has previously raised objections to foreign involvement in strategic industries, ordering the reversal of a completed acquisition is a rare and significant escalation in its tech policy stance.
The move underscores Beijing’s growing determination to retain control over core artificial intelligence capabilities, regardless of corporate relocations or international structuring.
