China prohibits foreign acquisition of Manus, asking parties involved to revoke transaction

China's Office of the Working Mechanism for Security Review of Foreign Investment under the National Development and Reform Commission (NDRC) announced on Monday its decision to prohibit, in accordance with laws and regulations, the foreign acquisition of the Manus project and required the parties involved to revoke the transaction, according to the official website of the NDRC.

This regulatory approach targets no specific country or company, but applies a unified legal and procedural framework to all cross-border investment to better safeguard economic security and market order, an industry analyst said.

In December, Meta announced that it would acquire artificial intelligence (AI) start-up Manus, as the US technology giant accelerates efforts to integrate advanced AI across its platforms, according to Reuters.

Earlier, Manus, part of Beijing-based Butterfly Effect Technology Ltd Co, launched its AI agent, claiming that its performance surpassed that of OpenAI's AI agent DeepResearch, according to Reuters.

This decision reflects China's continued efforts to improve its foreign investment review system and regulate cross-border mergers and acquisitions in accordance with laws and regulations, Ma Jihua, a veteran industry analyst, told the Global Times on Monday. He noted that regulatory rules in key technology areas are being further refined and standardized, helping create a more predictable and well-structured environment.

On April 2, in response to foreign media inquiries regarding what measures the Chinese side would take concerning Manus' case and related questions, He Yadong, spokesperson of China's Ministry of Commerce (MOFCOM), said that the Chinese government supports enterprises in carrying out cross-border operations and technological cooperation according to their needs, but such activities must comply with China's laws and regulations and fulfill legal procedures.

This acquisition case has been controversial since it was first revealed. The main point of criticism is that Manus, an AI company developed with the support of Chinese engineers and infrastructure, suddenly "cut ties" with Chinese elements after receiving US investment, experts said, noting that at the time, the move raised concerns over whether it was circumventing regulatory scrutiny.

In March 2025, Manus launched what it claimed to be the world's first general-purpose AI agent. The company was then hailed as the second "DeepSeek moment" by some foreign media outlets. Just a few months later, Manus relocated its headquarters to Singapore in July, laid off dozens of China-based staff - retaining only core technical personnel - and completely ceased operations and services in the Chinese mainland, according to Bloomberg.

In April last year, Manus received $75 million in financing from the US venture capital firm Benchmark. The US subsequently launched an investigation because American funds are prohibited from investing in Chinese high-tech companies, according to CNBC and Yahoo Finance.

In December last year, Meta announced the acquisition of Manus for approximately $2 billion, making it the third-largest acquisition in Meta's history.

According to China's Catalogue of Technologies Prohibited and Restricted for Export and the newly revised Foreign Trade Law, the export, cross-border transfer, and related investment activities involving such technologies are required to undergo security review and obtain the necessary licenses in accordance with the law. The Chinese side has a fully sufficient and solid legal basis for exercising jurisdiction over this transaction.

This regulatory approach is not directed at any specific country or company, but is based on a unified legal framework and procedural requirements for all types of cross-border investment activities, with the aim of safeguarding economic security and maintaining market order, Li Chang'an, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Monday.

China has consistently encouraged enterprises to expand internationally and engage in technological exchanges based on their development needs. However, it is important to note that all cross-border investment, technology cooperation, and related activities must comply with relevant laws and regulations and follow required approval and compliance procedures, said Li.

"As cross-border cooperation in key technology areas such as AI becomes more frequent, cases like this may help further institutionalize review mechanisms and secure the healthy and sustainable development of the rapidly growing technology sector," Li said.