In a major escalation of the US-China AI rivalry, the Chinese government officially blocked Meta’s $2 billion acquisition of the AI startup Manus on Monday, April 27, 2026.
China’s National Development and Reform Commission (NDRC) issued a definitive order for both parties to “unwind” the transaction, citing violations of foreign investment security and technology export laws.
1. The Conflict: “Singapore Washing”
The core of the dispute lies in the origins of Manus’s technology. Although Manus is currently headquartered in Singapore, the NDRC argues it remains under Chinese jurisdiction.
- The Origin Story: Manus was founded in Beijing in 2022 by Xiao Hong and Ji Yichao under the parent company Butterfly Effect.
- The Relocation: In July 2025, the company shut its China offices and relocated to Singapore—a move tech insiders call “Singapore Washing”—to bypass US investment restrictions and Chinese IP export rules.
- The Block: Beijing has rejected this “offshore restructuring,” asserting that because the core talent and algorithms originated in China, the deal constitutes an unauthorized transfer of critical national security assets.
2. The Operational Nightmare
Because the deal was announced and “closed” in December 2025, Meta has already integrated Manus into its ecosystem, making a “reversal” incredibly complex.
- Deep Integration: Manus’s “action engine” (autonomous agents that can browse the web and code) is already baked into Meta’s internal tools.
- Personnel: Most of Manus’s staff had already moved into Meta’s Singapore offices.
- Financial Complexity: Early investors, including Tencent and Hongshan, have reportedly already cashed out their stakes, leading to questions about how the $2 billion in funds can be “returned” as ordered.
3. Exit Bans and Legal Threats
The Chinese government has taken a “hardball” approach to enforcing the block, targeting the individuals behind the deal.
- Exit Bans: In March 2026, CEO Xiao Hong and Chief Scientist Ji Yichao were summoned to Beijing and placed under exit bans, preventing them from returning to their team in Singapore.
- Criminal Charges: The NDRC has warned that if the deal is not fully unwound—including the re-registration of ownership and the cessation of Meta’s use of the Manus algorithm—involved individuals could face criminal charges in China.
4. Why Manus is the “Next DeepSeek”
Manus became a high-stakes target because it represents the next frontier of AI: Agentic Intelligence.
- Autonomous Action: Unlike standard chatbots (like GPT-4), Manus agents can independently plan and execute complex, multi-step tasks like market research, file management, and software creation without constant human prompting.
- Model Agnostic: Manus does not build its own models; instead, its framework sits on top of existing LLMs, making it a “natural fit” for Meta’s goal of bringing AI agents to billions of users.