News Desk
China has blocked Meta’s planned USD 2 billion acquisition of AI startup Manus, triggering fresh concerns for global investors seeking to buy into Chinese‑linked technology firms. The National Development and Reform Commission ordered the deal to be reversed under national security rules introduced in 2021 .
Beijing said the decision was based on Manus’s deep ties to China in technology and data security, regardless of where the company was incorporated . Officials have made clear that they do not want Chinese AI capabilities transferred to American companies without explicit approval.
Manus was recognised as an emerging AI innovator and was built with Chinese engineers and infrastructure before it shifted operations abroad with support from US investors . After the acquisition announcement, co‑founders Xiao Hong and Ji Yichao were restricted from leaving China following discussions with regulators, highlighting the pressure on Chinese AI entrepreneurs navigating geopolitical tensions.
Legal experts say Chinese‑founded companies cannot avoid regulatory oversight simply by relocating overseas if they retain operational or intellectual property links to China . Investors may now need full separation of research, talent and IP to reduce regulatory risk.
Meta completed the takeover after only a short due‑diligence period and did not seek Chinese approval, which added to Beijing’s concerns . The unwinding process is expected to be complex, involving the reversal of equity transfers and the return of funds and intellectual property.
The case has raised the perceived risks of cross‑border deals involving US buyers. Analysts say any American company looking to acquire Chinese‑founded AI startups must now treat China’s national security review as a major factor, even if the target company is based outside China.
