China shut down Meta’s attempt to acquire agentic technology that originated within its borders, a blow to further technical interchange and investment between China and the U.S.
What’s new: China’s cabinet-level regulator in charge of economic planning and development blocked Meta’s proposed acquisition of Manus, a Singapore-based startup that was founded in China and offers a popular AI agent. Meta and Manus unwound the deal, which was worth as much as $2.5 billion. Beyond quashing Meta’s plans to offer agentic products and features, the action upended an emerging strategy for launching AI startups built in China.
How it works: Meta’s purchase of Manus was viewed as a sign that Manus, having relocated to Singapore and closed its business in China, had maneuvered itself successfully beyond Bejing’s purview. But the government asserted its authority over strategically important technology developed in China by Chinese engineers. Startups founded in China responded by rolling back plans to move elsewhere to seek international investments or partnerships.
- The China-based company Butterfly Effect developed a general-purpose agent that completes long-running tasks with minimal user input and guidance. In early 2025, it launched Manus as an invitation-only beta and quickly attracted users as well as investments from major Chinese investors and Silicon Valley venture capitalists. The company relocated to Singapore in July. As the year ended, Manus reported $100 million in annual recurring revenue that was growing at 20 percent monthly.
- In December, Meta announced the deal to acquire Manus and began integrating Manus technology into its own AI chatbots and offerings on Facebook, Instagram, and WhatsApp. It also announced plans to continue operating Manus as an independent business.
- The following month, China’s National Development and Reform Commission (NDRC) opened a security review, citing concerns over potential transfers of data and foreign ownership of services that operate in China. In April, the agency said it will examine foreign investment in domestic AI companies much more closely, particularly to curb U.S. investment in and acquisition of technology developed in China. It went on to block the Meta-Manus deal.
- The move has created a chilling effect for China’s tech founders and investors, for whom the “Singapore strategy” no longer gives them the flexibility to raise money from foreign investors and explore partnerships with companies in and outside the region. They are cancelling plans to move abroad, pursue acquisitions, or raise money from U.S. and European sources.
Behind the news: For more than a decade, the U.S. and China have viewed advanced technology as a strategic arena tied to economic influence, military power, and national security. Earlier disputes over espionage, intellectual property, and technology transfer escalated into sweeping government intervention. The U.S. blacklisted the Chinese communications-technology company Huawei as a security risk in 2019 and imposed increasingly stringent export controls on semiconductors beginning in 2022. Meanwhile, Beijing set conditions on foreign companies seeking access to the Chinese market and imposed rules to reduce its reliance on Western technology. Numerous Chinese startups have attempted to sidestep the superpower rivalry by incorporating in Singapore and elsewhere. China’s decision to block the Meta-Manus deal strikes a blow to that strategy.
Why it matters: The tightening of China’s control over AI startups raises tensions amid an already tense situation between China and the U.S. This week, leaders of the two countries will meet to discuss geopolitical concerns, including AI. An agreement may permit technology and ideas to flow more easily between the two countries (and from China to Singapore and elsewhere in the region). But an ongoing stalemate could drive both countries to withdraw further from free exchange and harden defenses of their own national security and economic interests.
We’re thinking: Beijing’s regulators appear to be asserting authority over any strategically important company whose technology, talent, or operations originated in China. That would sharply narrow the path of founders and investors who hope to attract Western capital or pursue international acquisitions.