AI Power Struggle: China Stops Meta’s Manus Deal

China has ordered the unwinding of Meta’s acquisition of the artificial intelligence startup Manus, a move that signals a sharper turn in Beijing’s approach to foreign investment in sensitive technologies and intensifies uncertainty for AI founders operating across borders. The decision, issued by China’s National Development and Reform Commission (NDRC), effectively prohibits foreign investment in Manus and instructs the parties involved to reverse the deal. Officials said the action follows laws introduced in 2020 that strengthened national security reviews of foreign investments, particularly those involving technologies deemed strategically important.

The ruling comes after months of scrutiny. Chinese regulators first opened an investigation in January into whether Meta’s reported $2 billion acquisition complied with domestic rules, including requirements related to foreign investment approval and the export of certain technologies. Manus, while headquartered in Singapore, has Chinese roots: it was founded by Chinese engineers, previously operated offices in Beijing and Wuhan, and its early research and development work was conducted in China. Authorities argued that the key concern was not where the company is registered, but whether its technology, talent, and data remain closely tied to China’s industrial and national security interests.

Meta said the transaction was fully compliant with applicable laws and expressed confidence that the matter would be resolved appropriately. The company has invested heavily in artificial intelligence in recent years, and the Manus deal was seen as a rare bridge linking American capital and Chinese-origin AI talent. However, it remains unclear how the unwinding process would work in practice, especially given reports that the two companies’ teams had become deeply integrated, including working together from Meta’s Singapore offices.

Manus itself represents a new generation of AI startups focused on autonomous “AI agents” capable of performing complex tasks with minimal human input. After gaining attention in 2025 with a widely discussed product launch, the company attracted major investor interest, including a $75 million funding round led by Benchmark. It later restructured and relocated its headquarters to Singapore, shutting down its China offices and laying off staff as it sought to navigate tightening regulatory pressures in both China and the United States.

Analysts say the decision reflects a broader shift in the global AI landscape, where governments are increasingly focused not just on chips and models, but on talent and data flows. Some observers described the move as a warning to entrepreneurs attempting to operate between Chinese and Western ecosystems. The idea that incorporating in Singapore could insulate companies from Chinese regulatory reach has now been challenged, with experts noting that Beijing is willing to scrutinize offshore structures when core technology originates in China. The case has also been linked to a wider trend sometimes called “Singapore washing,” where Chinese-founded startups relocate abroad to attract foreign investment while maintaining ties to domestic resources.

The implications extend beyond this single deal. For Chinese AI startups and global investors, the ruling raises the stakes in deciding where to base operations and how to structure ownership. It also highlights growing concerns in Beijing over the offshore transfer of sensitive technology and talent, especially as competition with the United States intensifies. At the same time, some analysts warn that stricter controls could discourage overseas Chinese talent from returning home or collaborating with domestic firms, further fragmenting the global AI ecosystem.

The timing adds geopolitical weight, coming just ahead of a planned meeting between U.S. and Chinese leaders, where trade and technology tensions are expected to feature prominently. While Meta’s platforms remain blocked in China and the company has limited direct revenue exposure there, Chinese advertisers still represent a notable portion of its global business, underscoring the economic interdependence that persists despite political friction.

As AI development accelerates on both sides of the Pacific, the Manus case illustrates how regulation, talent mobility, and national security concerns are becoming inseparable from the industry’s growth trajectory.

Works Cited

“China Blocks US Tech Giant Meta from Acquiring AI Startup Manus.” Al Jazeera, 27 Apr. 2026, https://www.aljazeera.com/news/2026/4/27/china-blocks-us-tech-giant-meta-from-acquiring-ai-startup-manus.

“China Orders Meta to Unwind Acquisition of Manus AI Startup.” The New York Times, 27 Apr. 2026, https://www.nytimes.com/2026/04/27/business/china-meta-manus-ai-deal.html.

“China Blocks Meta Manus Deal as AI Tech Rivalry Intensifies.” CNBC, 28 Apr. 2026, https://www.cnbc.com/2026/04/28/china-blocks-meta-manus-deal-ai-tech-rivalry.html.

“AI Technology Illustration.” Google Images, https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQL4dz06MGunhBvoFZJQY-umtC9Qm-yzCu_ow&s.

“Artificial Intelligence Concept Image.” Yahoo Finance Media, https://s.yimg.com/ny/api/res/1.2/XhPQ7DLuQicLDjX2UhT4rg--/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD02NzQ-/https://media.zenfs.com/en/proactive_us_504/1adc60d7da724823f78ce7d0e9f93395.