China blocks Meta’s Manus acquisition amid growing tech war fears

China has moved to block Meta’s acquisition of Manus, a decision that puts a major U.S. tech deal in jeopardy and highlights Beijing’s fear of losing key artificial intelligence technology to the United States. The move comes as the rivalry between the two countries keeps widening and the pressure on cross-border investment in sensitive sectors keeps rising.

The state planner issued a brief statement Monday ordering the parties to unwind the deal after launching a probe into the acquisition earlier this year. The decision is expected to send a chill through China’s AI startup scene and may make other founders think twice before pursuing similar exits.

Why the Manus deal became such a flashpoint

Manus is not just another startup. It was founded in China and became well known for its AI agent, a system that can carry out tasks on a user’s behalf without direct supervision. It launched in March last year and quickly became a source of pride for many in China.

That pride faded after the company moved its headquarters and most of its operations to Singapore. Public anger grew even more after the acquisition by Meta was announced.

On Chinese social media, some users called the sale “treacherous” and accused the company of selling out to the U.S. That reaction came against the backdrop of sweeping U.S. export controls on China, which are designed to slow progress in frontier technologies like AI.

What China said about the Meta acquisition

China’s National Development and Reform Commission said it was prohibiting the foreign acquisition of Manus and required all parties to withdraw from the deal. The commission did not name Meta directly, but the move was clearly aimed at the U.S. tech giant.

The ban was issued through the commission’s Office of the Working Mechanism for Security Review of Foreign Investment, in line with Chinese laws and regulations. Officials did not give a detailed explanation for the decision.

The timing matters. The ban came less than a month before U.S. President Donald Trump was expected to travel to Beijing to meet Chinese leader Xi Jinping. The two sides are expected to discuss disputes ranging from trade to technology controls.

Meta says the transaction followed the law

Meta said the Manus transaction “complied fully with applicable law.” A spokesperson added that the company expected “an appropriate resolution” to the inquiry.

Manus also did not publicly respond to requests for comment. But its website says the company “is now part of Meta,” suggesting the deal had already been completed before Beijing stepped in.

That creates a difficult path forward. Soon after Meta announced the acquisition in December, it had already integrated Manus into internal systems, and executives from the startup had joined Meta. Unwinding that arrangement now may be complicated in practice.

What Manus offered Meta in the AI race

Meta’s interest in Manus was tied to the broader fight to lead in AI agents. These systems go beyond chatbots and can take actions on people’s behalf across computer-based tasks.

Manus provided a general-purpose AI agent that could handle sophisticated work such as:

• coding an app
• doing market research
• preparing quarterly budgets

For Meta, the acquisition could have strengthened its AI capabilities as competition with Google and OpenAI keeps intensifying. Blocking the deal may now mean a missed opportunity for Meta at a critical moment.

Why Beijing’s move could reshape AI investing

Analysts say the decision shows that China is tightening scrutiny of AI deals as geopolitical rivalry deepens. It also reinforces the split in global technology development between the U.S. and China.

Lian Jye Su, chief analyst at Omdia, said China is showing it is willing to “play hardball” when it comes to AI talent and capabilities, which Beijing sees as a national security asset. He added that the move could discourage similar acquisition plans by U.S. tech giants and may mirror U.S. export controls, entity lists and investment curbs on China.

A heavy-handed response could also have side effects inside China. Analysts have warned that blocking or annulling such deals may discourage entrepreneurs with global ambitions and could even push some talent to launch businesses abroad from the start.

A warning sign for Chinese startups with global ambitions

The decision is expected to have a chilling effect on China’s startup ecosystem, especially in AI. Beijing appears to be signaling that companies tied to sensitive technologies will face close review if they try to move into foreign ownership structures.

That message matters because Manus had already become a high-profile case. Before the acquisition, it was linked to Singapore-based Butterfly Effect Pte, though its roots trace back to Beijing-registered entities with similar names established years earlier.

Last month, the Financial Times reported that two co-founders, Xiao Hong and Ji Yichao, had been barred from leaving China during the investigation. That added to the sense that Beijing was taking a hard line.

The wider rivalry around AI and semiconductors

Beijing’s move also highlights how hard it has become to invest across borders in critical sectors like AI and semiconductors. The decision reinforces the growing divide in global tech development as the U.S.-China tension heats up.

The Manus case sits inside a much larger competition:

• the U.S. is tightening controls on advanced technology;
• China is moving to stop strategic assets from leaving the country;
• both sides are trying to secure their own AI advantage.

That is why the blocked acquisition is about more than one startup. It is a sign of where the entire industry may be heading.

What happens next

For now, the deal’s future is unclear. Beijing has ordered the parties to unwind it, but how that will happen in practice is still uncertain. Meta says it complied with the law and expects the inquiry to be resolved. While Chinese authorities have not said whether further steps will follow.

What is clear is that the acquisition has become another pressure point in the broader U.S.-China tech conflict. It has also raised the stakes for every company trying to navigate AI growth, regulation and geopolitics at the same time.

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