China’s government said on Monday it will demand the cancellation of Manus, a Singapore-based artificial intelligence company with Chinese founders, by Meta, which could freeze other Chinese entrepreneurs from seeking ties with foreign partners.
Chinese officials said in January they were investigating whether the December acquisition of Manus Metou violated the country’s rules on foreign investment. They also assessed whether the deal violated Chinese requirements for companies to obtain permits to export certain technologies.
The National Development and Reform Commission, a high-level ministry that oversees economic planning and plays a central role in setting China’s AI policy, said on Monday it had decided to ban foreign investment in Manus and ordered the parties involved to withdraw the acquisition.
It is not clear how such a transaction would take place. Meta described the two teams as “deeply integrated”. Members of the Manus team worked alongside Meta colleagues at the company’s Singapore office, according to two people familiar with the operation, who spoke on condition of anonymity because they were not authorized to speak publicly.
Meta said in a statement that the transaction was fully legal, adding: “We await an appropriate resolution to the inquiry.
The Chinese government issued its decision just weeks before a planned meeting between President Trump and Chinese leader Xi Jinping.
The New York Times reported last month that Chinese agency officials called Meta and Manus executives to express concerns about the deal, and that Manus executives were barred from leaving China, part of an apparent effort to discourage Chinese AI executives from moving businesses abroad.
As companies in China and the United States race to develop cutting-edge artificial intelligence, the review could make it harder for other Chinese firms to raise funding from foreign investors. It could also signal to Chinese researchers not to follow the Manus route, in which Chinese executives register companies outside China to circumvent regulations from both Washington and Beijing.
Manus is based in Singapore, but was founded by Chinese engineers and had a Chinese parent company. The company was incorporated offshore and incorporated in China as a foreign-owned entity; has branches in Beijing and Wuhan, China.
Many Chinese tech founders hope to attract investors from Silicon Valley. However, in recent years, they have increasingly found that they need to choose between targeting the Chinese market or moving their headquarters outside of China to court foreign investors.
Jianggan Li, chief executive of Momentum Works, a consultancy in Singapore, said the scrutiny facing the Manus deal “will make it increasingly difficult for Chinese AI founders who started in China to sit on both sides or cross over”.
“There are already a lot of uncertainties when it comes to AI start-ups, and most of the founders are technologists but not politically savvy,” Mr Li said.
Meta has spent billions on AI researchers and data centers, and its acquisition of Manus created a rare direct link between talent from the United States and China.
Chinese companies have accounted for a large share of Meta’s advertising revenue in recent years. On a call with analysts in 2024, Meta said Chinese advertisers accounted for 10 percent of its revenue, nearly double the amount two years ago. Chinese start-ups that offer games, short video apps and e-commerce have flooded Facebook and Instagram with ads as they look to build a presence outside of China.
Xinyun Wu contributed research from Taipei.
