The order, one of Beijing’s strongest moves yet against a foreign purchase of a Chinese tech company, came on Monday from China’s National Development and Reform Commission (NDRC), which said foreign investment in Manus would be prohibited under Chinese law, and the deal must be unwound.

Beijing is now concentrating on AI talent, software and intellectual property, and areas once taken over by chip restrictions now include artificial intelligence, as competition between China and the United States gets stronger

Chinese authorities began examining the acquisition in January, shortly after Meta completed the purchase in December. The review later intensified, and in March, Manus co-founders Xiao Hong and Ji Yichao were reportedly called to Beijing for talks with regulators and then barred from leaving China.

Neither founder publicly responded to requests for comment.

Meta has also not issued a public response.

Manus had drawn attention in China after launching what it described as a general AI agent in 2025. State-backed media had commended the company as a possible successor to DeepSeek, one of China’s most-watched AI firms.

Unlike model developers who build large language systems from scratch, Manus focused on agent software designed to complete multi-step tasks with limited human input. These tasks include coding, research and workflow automation.

Before the takeover, Manus raised $75 million in funding led by Benchmark in May 2025.

The company later shut its China offices and moved operations to Singapore, where its parent company, Butterfly Effect, was restructured. That move was seen as an attempt to attract foreign capital while easing both U.S. and Chinese restrictions.

Chinese regulators now appear determined to challenge that route.

The practice, sometimes called “Singapore washing”, involves Chinese-founded startups shifting legal structures or operations abroad while keeping roots in China. The latest development with Beijing reveals that strategy may no longer guarantee protection from investigations.

Startups moving overseas may not be enough as authorities may now demand proof of where management is headquartered, where research is done, where data is stored and who controls the company’s technology.

The China ruling could also create some problems for Meta, as some Manus staff had already moved into Meta’s Singapore offices, while parts of the startup’s work were reportedly being integrated into Meta projects.

Any reversal may now require separating teams, contracts and technology already tied together.

This is coming weeks before a planned summit in Beijing between U.S. President Donald Trump and Chinese President Xi Jinping in mid-May.

That meeting was expected to cover trade and technology tensions, but this issue now adds another case.

China has previously criticised foreign-linked deals involving strategic assets, but forcing the breakup of a completed transaction is rare.

China does not want core AI assets leaving its reach, no matter where a company later relocates.

Speaking in Beijing on Thursday, the Ministry of Commerce confirmed it will assess whether the transaction aligns with Chinese laws covering export regulations, technology transfers, overseas investment and data movement. 

The review follows Meta’s agreement to buy Manus in a deal reported to be worth more than $2 billion.

At a regular press briefing, ministry spokesperson He Yadong said regulators would work across departments to determine whether the acquisition complies with existing regulations. 

He stressed that companies involved in foreign investment and technology-related transactions must operate within China’s legal framework.

Manus, now based in Singapore, has roots in China. It emerged from Butterfly Effect, also known as Monica.Im, before becoming a standalone company and relocating earlier this year. 

That development is now a big part of the investigation. Regulators are examining whether the transfer of staff, data and core technology from Beijing to Singapore required an export licence before the Meta deal was finalised.

Beijing has increased oversight of AI models, agents and related intellectual property, treating them as assets with national security implications. 

The Manus case will help clarify how those regulations apply to Chinese-founded startups that move overseas ahead of foreign acquisitions.

The startup received huge attention after launching its first AI agent in March, a tool designed to handle tasks such as market research, coding and data analysis. 

Within eight months, Manus said it had crossed $100 million in annual recurring revenue, a pace it described as unprecedented. The company also drew global interest after raising $75 million in a funding round led by U.S. venture capital firm Benchmark in April.

Meta has already made known how it views the deal. “Manus’ exceptional talent will join Meta’s team to deliver general-purpose agents across our consumer and business products, including in Meta AI,” the company said in a statement in December.

Chinese officials have been careful to frame the review as regulatory rather than punitive. “The Chinese government consistently supports enterprises in conducting mutually beneficial transnational operations and international technological cooperation in accordance with laws and regulations,” He Yadong said.

The deal values Manus at between $2 billion and $3 billion, although Meta has chosen not to disclose financial terms. Manus, now based in Singapore, did not respond to requests for comment at the time of writing.

The acquisition gives Meta full control of Manus’s technology, which it plans to operate, sell and embed across its consumer and business products, including Meta AI. 

This will help to secure what many in the industry now see as the most valuable layer in AI development, the execution layer, where software agents go beyond conversation to carry out complex tasks on their own.

Manus rose quickly into the global spotlight earlier this year after releasing what it described as a general AI agent. Unlike standard chatbots, the system was designed to make decisions and complete tasks with minimal prompting. 

The product went viral on X and was soon compared to DeepResearch, a benchmark tool in the sector. The company has claimed its agent outperforms that system, helping to drive both attention and controversy.

Behind the attention was rapid commercial growth. Manus became the fastest startup to cross $100 million in annual recurring revenue, reaching a $125 million run rate in under eight months. 

In 2025 alone, its systems processed 147 trillion tokens and powered around 80 million virtual computers, figures that point to unusual scale for a company so young. That pace made Manus one of the most talked-about AI agent startups globally.

Meta’s interest shows a change in strategy. While the company has spent years building open-source foundation models such as Llama, this deal reveals a goal to own proprietary systems that sit on top of those models and actually do the work. 

Autonomous agents that can research, write code and analyse data are now the next battleground, and competition is increasing fast.

The acquisition comes after a year of heavy spending by Meta, including its investment in Scale AI, a deal that valued the data-labelling firm at $29 billion. 

Competitors are not standing still. Microsoft is expanding Copilot, Google is pushing Gemini, and OpenAI is developing DeepResearch.

Manus’s background also adds a geopolitical edge to the deal. Founded in China and backed by its parent company, Beijing Butterfly Effect Technology, the startup was once described as China’s next DeepSeek. 

It later relocated to Singapore, joining a growing number of Chinese tech firms seeking to reduce exposure to Sino-US tensions. Singapore’s neutral stance and trade-friendly policies have made it a preferred base for global expansion.

Beijing had shown interest in supporting Manus, and the company maintains a strategic partnership with Alibaba to collaborate on AI models. 

Meta’s acquisition changes ownership firmly to a U.S. technology giant, a development that is likely to be closely watched in both Washington and Beijing.