China blocks Meta’s AI startup Manus acquisition amid US investment crackdown

China’s state planner has blocked US tech giant Meta’s acquisition of Beijing-based AI startup Manus on Monday in a bid to cancel the deal.

The motive behind this decision taken by China’s National Development and Reform Commission is to prevent the US entities and tech firms from taking over Chinese talent and intellectual property.

The government stated the deal broke current laws and has ordered everyone involved to cancel the sale. American lawmakers have already banned U.S. investors from putting money into Chinese AI companies.

The situation is expected to be a major "thorny issue" at the upcoming mid-May summit between President Trump and President Xi Jinping.

The recent announcement also raises alarm among venture capitalists and tech founders who were hoping to leverage the “Singapore-washing” model. Under this model, the companies can relocate from China to the city state to avoid scrutiny from Beijing and Washington.

Last week, Bloomberg reported that China is planning to restrict US funding in Chinese technology firms, including some of the country’s highest-profile AI pioneers, from accepting Washington funding without government capital.

Beijing’s recent block also signals that AI is now viewed as a critical national security asset, similar to semiconductors.

Alfredo Montufar-Helu, a managing director at Ankura China Advisors, said, “China is saying we will prevent foreign acquisition of assets we consider important for national ⁠security — and ​AI is now clearly one of them,” adding that the firms that are relocating overseas will not shield them ​from scrutiny.

What is the Meta-Manus deal?

Meta, the parent company of Facebook and Instagram, acquired Manus in December for more than $2 billion. The deal was meant to advance its capabilities in AI agents.

Chinese regulators have effectively stalled the integration by barring Manus executives, CEO Xiao Hong and Chief Scientist Ji Yichao, from leaving China.

In January, China also decided to conduct an investigation into whether the acquisition complies with laws and regulations related to tech export and import controls and overseas investment.

Manus gained a reputation For releasing what was claimed to be the world’s first general AI agent, leading state media to label it "China's next DeepSeek."