China’s decision to block the $2 billion Meta-Manus deal shows how far Washington and Beijing are drifting apart over AI

China has blocked Meta’s deal to acquire AI startup Manus. The National Development and Reform Commission, the country’s top macroeconomic regulator, unceremoniously posted on Monday that it had “decided to block the foreign acquisition of the Manus project and require the parties to unwind the deal.”Recommended Video The move is a headache for Meta, for whom the Manus acquisition, reportedly valued at around $2 billion, was a key element of its new AI strategy. It’s also not clear how Meta can “unwind” the deal: Manus employees had already joined Meta’s AI team, and backers like Tencent and Hongshan Capital had already received their cut of the deal, according to a report from Bloomberg. The blocked deal also shows how quickly the U.S. and Chinese AI ecosystems are decoupling, as both Washington and Beijing now seek to maintain control of strategic technologies and prevent them from leaking to the other. “The transaction complied fully with applicable law. We anticipate an appropriate resolution to the inquiry,” a Meta spokesperson said in a statement. Investors shrugged off the news, with Meta shares up 0.5% in Monday trading. Is Manus a Chinese company? A Singaporean company? Or both? Manus first grabbed the global spotlight in early 2025 when, in the wake of DeepSeek’s shock to global markets, its parent company—then called “Butterfly Effect”—unveiled an AI agent that its founders promised was “truly autonomous.” Then, in July 2025, the company announced that it had moved its office from Beijing in China, where it was founded, to Singapore, a popular destination among Chinese companies trying to distance themselves from their country of origin. Then, six months later in December, Meta announced its acquisition of Manus, and said the startup would shut down its operations in China. Chinese authorities quickly said they would review the deal, noting that the startup still relied on Chinese talent and technology. The Chinese government has also barred the two Manus cofounders from leaving China, according to the Financial Times. Beijing routinely bars people subject to potential investigations from leaving the country. Several other Chinese companies have tried to establish themselves in Singapore in response to regulatory scrutiny, either from Beijing or Washington. TikTok set up its international headquarters in the Southeast Asian country as it battled threats of a U.S. ban, and fast fashion platform Shein established itself as a Singaporean company as it prepared for a New York IPO. Neither strategy worked: TikTok still had to deal with a ban in the U.S., and Shein has yet to IPO in any jurisdiction, let alone New York. Manus could have also switched its headquarters to Singapore in response to U.S. regulatory scrutiny. U.S. rules largely bar investment into China’s AI sector. Semafor reported last year that the U.S. Treasury Department was probing a pre-switch Manus funding found that included Silicon Valley firm Benchmark. In addition, becoming a Singaporean company could have helped Manus access advanced AI processors from companies like Nvidia, which are currently subject to U.S. export controls. An expanding Chinese body of regulation Beijing has built up an array of legal tools to put pressure on foreign companies, developed in response to American sanctions, export controls and investment bans. (Washington has routinely blocked Chinese investment and acquisitions of U.S. companies) Chinese officials have previously probed…

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