China blocks Meta's $2B Manus buyout

The playbook of relocating a Chinese AI team to Singapore to engineer a multi-billion-dollar exit to Big Tech just hit a concrete wall.

China’s top state planner, the National Development and Reform Commission (NDRC), has ordered Meta to unwind its acquisition of Manus, an agentic AI startup originally built in Beijing. In a brief statement, the regulator barred foreign investment in the project and instructed both parties to cancel the deal, shutting down a transaction valued at roughly $2 billion to $3 billion that was first announced late last year.

A done deal that now has to be undone

Unwinding the acquisition is going to be messy. This was not a deal stuck on paper; integration was already well underway.

As of March, around 100 Manus employees had already moved into Meta’s Singapore offices, and the startup's co-founder and CEO, Xiao Hong, was reporting directly to Meta COO Javier Olivan. Meta insists the transaction fully complies with applicable laws and that it anticipates an appropriate resolution.

On the ground, however, Beijing has tightened its grip. Reports surfaced in March that Hong and Chief Scientist Yichao Ji had been placed under exit bans, preventing them from leaving mainland China amid an investigation by authorities, including the Ministry of Commerce.

Manus was founded in 2022 by Hong, Ji, and Tao Zhang as Butterfly Effect in Beijing before shifting its headquarters to Singapore in mid-2025. Last March, the startup unveiled a general-purpose AI agent capable of planning and executing tasks like coding, data analysis, and market research on its own, earning buzz as the next DeepSeek. Following a $75 million round led by Benchmark, Manus announced in December that it had crossed $100 million in ARR just eight months after launch, claiming to be the fastest startup ever to reach that milestone from zero.

Caught between two capitals

The transaction quickly triggered alarms on both sides of the Pacific. While the so-called "Singapore-washing" strategy was designed to help Chinese-born startups avoid geopolitical crossfire, Manus ended up in the crosshairs of both.

In Washington, lawmakers raised flags over American venture capital backing a team with deep Chinese ties, especially alongside broader concerns about protecting proprietary AI advances. In Beijing, regulators treated the move as an unauthorized transfer of critical technology and talent abroad, ultimately invoking cross-border investment and export control rules to kill the sale.

Why it matters

This decision effectively closes one of the most popular exit pathways for Chinese AI talent. For years, relocating corporate headquarters to Singapore looked like a viable detour to raise Western capital and sell to US tech giants. Beijing’s intervention proves that changing postal codes does not erase jurisdiction over original IP and domestic founders.

For Meta, this is a serious headache. Mark Zuckerberg bet heavily on Manus to supercharge autonomous agents across consumer apps and enterprise software, integrating its team while cutting thousands of other jobs to fund AI infrastructure. Having a team already sitting in your Singapore office while their founders are barred from traveling and regulators demand a reversal puts Meta in operational limbo.

We think this veto shows that agentic AI is no longer treated like ordinary enterprise software—governments see it as sovereign tech. Cross-border M&A in frontier AI is rapidly becoming a political impossibility, and startups trying to stay neutral between the US and China will increasingly find they have nowhere left to stand.