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.

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This is designed to avert a nationwide ban and settle long-running security challenges with Washington.

Under the binding agreement, ByteDance will cut its stake to 19.9%, while investors led by Oracle, Silver Lake and Abu Dhabi’s MGX will collectively take 80.1% ownership of a newly formed company, TikTok USDS Joint Venture LLC. 

The structure is intended to satisfy U.S. laws that demand the separation of TikTok’s American business from Chinese control.

The arrangement follows legislation passed by Congress in April 2024 that required ByteDance to divest TikTok’s U.S. operations or face a ban. The Supreme Court upheld the law in January 2025, setting a January deadline. This joint venture, due to close on 22 January, is meant to meet that requirement.

Ownership alone, however, has not ended the issue. The new entity will be run by a seven-member board, with Americans holding most seats. ByteDance will appoint one director. Oracle has been named the “trusted security partner” and will be responsible for auditing compliance and protecting US user data, which will be stored on Oracle’s cloud infrastructure inside the United States.

TikTok’s chief executive, Shou Zi Chew, told staff that the venture would “operate as an independent entity with authority over U.S. data protection, algorithm security, content moderation and software assurance,” according to an internal memo. 

He also said TikTok’s global US entities would separately handle “global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing”.

Even so, there’s still uncertainty over the heart of the platform, its recommendation algorithm. Former U.S. officials and analysts say it is still not clear if the algorithm has been transferred, licensed, or remains under ByteDance’s control, with Oracle potentially limited to oversight rather than ownership.

Reports from Chinese media have suggested ByteDance may continue to play an operational role or receive revenue from the US business, leading to questions about Beijing’s influence despite the new structure.

President Donald Trump has openly credited TikTok with helping his re-election and maintains a large following on the app. His administration has also launched an official White House TikTok account. At the same time, Trump’s close ties to Oracle chief executive Larry Ellison have drawn criticism from Democrats.

Senator Elizabeth Warren has been among the most vocal opponents, saying: “Trump wants to hand over even more control of what you watch to his billionaire buddies. Americans deserve to know if the president struck another backdoor deal for this billionaire takeover of TikTok.”

Trump previously said high-profile investors, including Michael Dell and Rupert Murdoch, could be involved, though there are no reports about who ultimately joined the final deal.

This agreement ends the immediate threat of a ban, but not the argument around influence and control. 

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Starting Wednesday, the United States will lower its punitive tariffs on Chinese goods from 145% to 30%. China will respond in kind, dropping its retaliatory duties from 125% to 10%. 

This is a big change from the near-embargo levels both sides had maintained, freezing nearly $600 billion in two-way trade and straining global supply chains.

For months, there have been high tariffs, factory slowdowns, and markets on edge. Now, with this deal, the two countries are finally showing willingness to talk, not threaten.

Speaking from Geneva after two days of negotiations, U.S. Treasury Secretary Scott Bessent said plainly, “Both countries represented their national interest very well.” He added, “We both have an interest in balanced trade, the U.S. will continue moving towards that.”

The deal, reached during face-to-face meetings at the U.N. ambassador’s villa overlooking Lake Geneva, also includes a commitment to ongoing discussions, alternating between the U.S. and China. Both governments published a joint statement outlining the framework for continued talks.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”

This unexpected softening comes just months after President Trump, having returned to office in January, escalated the trade war to new heights by raising tariffs to 145%. 

China retaliated with equally aggressive tariffs and export restrictions on rare earth materials, key inputs for U.S. industries ranging from defence to consumer electronics.

Markets reacted instantly. Wall Street futures jumped. The Hang Seng in Hong Kong surged by 3.4%. In Europe, container shipping giant Maersk rose more than 12%, and luxury brands like LVMH and Kering recorded gains of 7.4% and 6.7% respectively. Oil prices also rose, with Brent Crude climbing 2.8%.

Economists had expected a more modest rollback, if any. Zhiwei Zhang of Pinpoint Asset Management said, “This is better than I expected. I thought tariffs would be cut to somewhere around 50%.” He added, “Obviously, this is very positive news for economies in both countries and for the global economy.”

But don’t mistake this deal for a full reconciliation. The U.S. tariffs targeting critical sectors such as electric vehicles, semiconductors, steel, and pharmaceuticals will remain in place. According to Bessent, these areas are still considered strategic and vulnerable.

“We have identified 5 or 6 strategic industries and supply chain vulnerabilities and we will continue moving towards US independence or reliable supplies of allies on those,” he said.

While much of the attention was on tariffs, the discussions unexpectedly touched on the U.S. fentanyl issue, a national security issue that Trump cited when imposing some of the original tariffs. 

Chinese negotiators reportedly showed unusual openness to cooperation. A Chinese deputy minister was specifically sent to address the opioid issue, which Bessent later described as “the upside surprise for me from this weekend.”

It’s too early to say whether this 90-day truce will lead to a lasting agreement. But it has halted, at least temporarily, a damaging escalation.

This weekend’s meetings may just be the start of a longer, complicated road toward resolving issues over intellectual property, forced technology transfers, and unfair subsidies.

President Trump, speaking before the deal was formally announced, described the talks as “a total reset… in a friendly, but constructive, manner.”

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