China has formally ordered Meta Platforms (Nasdaq: META) to unwind its $2 billion acquisition of agentic AI startup Manus, in a landmark regulatory intervention that establishes new state control over the international exit of Chinese-founded AI companies — regardless of where they incorporate.
China’s National Development and Reform Commission issued a cancellation order Monday through its Office of the Working Mechanism for Foreign Investment Security Review, saying the decision was made “in accordance with laws and regulations” — without elaboration.
In January, China’s Ministry of Commerce opened a probe examining whether the acquisition — announced in December 2025 — complied with rules governing technology exports, foreign investment, and national security. By March, NDRC investigators had summoned Manus co-founders Xiao Hong and Ji Yichao to Beijing for questioning and barred them from leaving China, where they remain.
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Manus launched in March 2025 as a general-purpose AI agent capable of autonomously executing complex multi-step tasks across web browsers, code editors, and file systems. Within eight months, the company reported more than $100 million in annualised revenue, over 80 million virtual computers supported, and 147 trillion tokens processed. Benchmark led a $75 million funding round in April 2025 that valued the startup at $500 million.
Manus was founded in China before its parent company, Butterfly Effect, relocated to Singapore — a structure common among Chinese AI startups seeking international investment while maintaining operational roots in China. Meta is committed to winding down Manus’s remaining China operations after the deal closed, ensuring no continuing Chinese ownership interest. In March, Meta told CNBC the acquisition “complied fully with applicable law.”
The ruling resolves a question no jurisdiction had settled: whether an AI team constitutes a technology export. Beijing’s answer is yes.
Any Chinese-founded AI startup incorporated outside China must now treat the NDRC foreign investment security review as a genuine deal risk. The Washington Post reported last week that Chinese tech workers described the Manus case as establishing “a new red line” between legitimate offshore incorporation and technology outflow subject to state control.
Meta paid $2 billion for a team and technology it must now unwind. Whether it can recover any portion of its acquisition consideration, retain Manus team members outside China, or argue that the Singapore incorporation insulates the deal from NDRC jurisdiction are questions that will be resolved through legal proceedings.
A March 2026 OECD report confirmed China had crossed the $1 trillion threshold in R&D spending, reaching parity with the United States on a purchasing power basis. Both data points reflect the same strategic posture: Beijing treating advanced AI capability as a national asset — one it intends to keep.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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