China weighs Meta’s Manus deal in widening battle over AI and tech control

China weighs Meta’s Manus deal in widening battle over AI and tech control

• China reviews Meta's $2B AI start-up Manus acquisition for export law breaches
• Manus's move to Singapore complicates China's regulatory scrutiny of the deal
• Outcome may set precedent for cross-border AI deals amid US-China tech rivalry

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Chinese authorities have begun reviewing Meta’s $2 billion acquisition of the AI start-up Manus, assessing whether the transaction violates China’s technology export control laws and whether the company’s earlier relocation to Singapore required official approval, the Financial Times reported.

The deal, announced last week, stands out as a rare example of a major US technology company buying a cutting-edge artificial intelligence group with Chinese origins at a time when Washington and Beijing are increasingly decoupling their technology sectors.

According to two people familiar with the matter, officials in China’s commerce ministry are examining whether Manus’s staff, software and intellectual property were legally allowed to leave China before the company was sold to Meta.

Export controls could give Beijing leverage

The review is still at an early stage and may not lead to a formal investigation. But if regulators determine that an export licence was required — and not obtained — the finding could give Beijing significant leverage over the transaction, including the power to pressure the parties to restructure or even abandon the deal.

China previously used similar export control mechanisms to influence Washington’s attempt to force the sale of TikTok during Donald Trump’s first term.

One person familiar with the thinking in Beijing said the case is being watched closely because of concerns it could encourage other Chinese AI start-ups to relocate abroad to escape domestic regulatory oversight.

The “Singapore washing” phenomenon

In recent years, many Chinese technology groups seeking global customers have opened offices or second headquarters in Singapore — a practice sometimes dubbed “Singapore washing” because it reduces geopolitical scrutiny while preserving Chinese engineering roots.

In Manus’s case, however, the move went further. The company’s core team relocated to Singapore in mid-2025, leaving behind only a largely dormant legal entity in Beijing.

That makes the regulatory question more complex: if the technology was developed in China, authorities may still argue that it falls under export control rules, even if the company now operates abroad.

How Manus is structured

Manus is operated by Singapore-based Butterfly Effect Pte, but its technology was developed at least in part by Beijing Butterfly Effect Technology, founded in 2022 by the company’s leadership, including chief executive Xiao Hong.

While the Beijing entity remains registered, its offices were empty when reporters visited last year. Meta plans to integrate Manus’s AI agent technology into its own products. Meta’s platforms, including Facebook and Instagram, remain blocked in China.

Not “core” tech — but still sensitive

One person familiar with the Chinese review said Manus’s product — an AI-powered assistant — is not considered strategically vital national technology, which could reduce the urgency for a harsh intervention.

Still, the case touches a sensitive nerve: whether Chinese-developed AI systems can be quietly transferred into US corporate ownership during a period of intensifying tech rivalry.

The move to Singapore followed a funding round led by US venture capital firm Benchmark, which itself had triggered scrutiny from US regulators under new rules restricting American investment in Chinese AI companies.

A warning from Chinese policy circles

Cui Fan, a professor at the University of International Business and Economics, wrote in a public post that any Chinese review should focus on whether export-controlled technologies were developed while the team was still in China.

“If unauthorised export of restricted technologies is confirmed, legal liability may arise — including criminal liability,” he wrote, adding that “believing that quickly severing ties with China can bypass both US and Chinese regulatory regimes may be overly simplistic.”

A sign of a splitting global AI ecosystem

In Washington, some analysts see the acquisition as evidence that US investment and chip export controls are reshaping the global AI industry into two competing spheres.

“The Manus acquisition shows that US restrictions are accelerating the split between the US AI ecosystem and the Chinese AI ecosystem,” said Chris McGuire of the Council on Foreign Relations. “Manus’ defection shows that, for now, the US ecosystem looks more attractive.”

A test case for tech decoupling

Neither Meta nor Manus has commented publicly, and China’s commerce ministry has not responded to questions.

But the outcome of the review could become a precedent-setting case for how aggressively China polices the outward flow of AI talent and technology — and how difficult it will become to do cross-border deals in a world where geopolitics increasingly shapes corporate strategy.

What was once just an acquisition may now become a test of who really controls the future movement of AI technology.