China Orders Meta To Unwind $2 Bn Buy of AI Startup Manus

China ordered US tech giant Meta to unwind its $2 billion-plus acquisition of artificial intelligence startup Manus on Monday, as Beijing tightens scrutiny of US investment in domestic startups in frontier technologies. 

The National Development and Reform Commission’s move highlights China’s commitment to stopping US firms acquiring AI talent and intellectual property, as Washington tries to cut off Chinese tech firms’ access to advanced US chips.

The NDRC’s office for reviewing the security of foreign investments said it would “prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction”. It did not name Meta or other overseas investors in Manus.

The sudden move comes weeks before a planned mid-May summit between US President Donald Trump and his Chinese counterpart Xi Jinping in Beijing. China’s commerce ministry had announced an investigation into the sale in January, days after California-based Meta completed its December acquisition of the startup.

Manus investors exited the company after Facebook-owner Meta’s takeover, three sources familiar with the matter said.

China rarely orders corporate deals to be unwound after completion, in a sign of heightened regulatory scrutiny amid US-China tech competition. Manus’ two co-founders, CEO Xiao Hong and chief scientist Ji Yichao, were summoned to Beijing for talks with regulators in March and subsequently barred from leaving the country, five sources familiar with the matter said.

Xiao and Ji did not respond to Reuters’ requests for comment.

After receiving a $75 million fundraising round led by US venture firm Benchmark in May 2025, Manus shut down its China offices in July, laying off dozens of employees. It then moved its operations to Singapore without seeking Chinese regulators’ approval, people familiar with the matter said.

This allowed Manus’ parent company, Butterfly Effect, to re-incorporate in Singapore and bypass US investment restrictions on Chinese AI firms, as well as Chinese regulatory constraints on domestic AI firms transferring their IP and capital overseas. Manus staff have already moved into Meta’s Singapore offices, with projects going ahead despite the exit bans on the two executives, two sources familiar with the matter said.

China’s request to unwind the Manus deal is the latest high-profile case of it blocking a cross-border transaction. Last year, China criticized Li Ka-shing’s CK Hutchison for agreeing a $23 billion sale of dozens of ports worldwide to a consortium led by US asset manager BlackRock. The deal was welcomed by US President Donald Trump.