China Blocks Meta's $2 Billion Acquisition of AI Startup Manus

Chris Pereira, president and CEO of consulting firm iMpact, noted that Singapore incorporation does not shield deals from Chinese regulatory reach. Winston Ma, adjunct professor at NYU School of Law, pointed out challenges in reversing data transfers compared to physical transactions.

The blocking occurs amid escalating U.S.-China rivalry in AI. In 2022, following OpenAI's ChatGPT launch, the U.S. tightened chip export restrictions to China, affecting companies like Nvidia. China has pursued tech self-sufficiency, with breakthroughs like DeepSeek's open-sourced AI model in January 2025.

Manus released an AI tool on March 5, 2025, hailed by state media as advancing beyond DeepSeek. Beijing's municipal government noted Manus' creation by local firm Beijing Red Butterfly Technology. However, by July 2025, Manus had restructured in Singapore.

Gary Dvorchak, managing director at Blueshirt Group, said China lacks leverage over Meta, whose platforms are blocked in the country, but could disrupt Manus' operations, rendering it worthless to Meta. The decision comes days before Meta's scheduled earnings release and less than a month before President Donald Trump's planned visit to Beijing, where trade and investment are expected to be discussed.

In the U.S., Senator John Cornyn raised concerns about investments in Manus, questioning American capital flowing to Chinese-linked firms.

Unwinding the deal poses complexities, as around 100 Manus employees have integrated into Meta's Singapore offices, with founders in executive roles. Manus CEO Hong reports to Meta COO Javier Olivan. Reports indicate co-founders Hong, Yichao Ji, and Tao Zhang face exit bans in China.

Dan Wang, a director on Eurasia Group's China team, suggested the case could deter overseas AI talent from returning to China, further dividing the U.S. and Chinese AI ecosystems. The White House recently announced closer work with U.S. AI firms to counter theft of advances, primarily from China, prompting a response from China's U.S. embassy rejecting suppression of Chinese companies.

Similar strategies, dubbed "Singapore washing," have been used by firms like Shein to reduce Chinese ties amid scrutiny from both Washington and Beijing. The Manus case highlights risks around data, talent, and intellectual property in cross-border tech deals.