China orders Meta to unwind $2 billion acquisition of Manus

China’s commerce ministry announced an investigation into the sale in January, days after Meta completed its December acquisition of the startup

China ordered U.S. tech company Meta to unwind its $2 billion-plus acquisition of artificial intelligence startup Manus on Monday, as Beijing tightens scrutiny of U.S. investment in domestic startups developing frontier technologies.

The National Development and Reform Commission’s move highlights China’s commitment to stopping U.S. firms acquiring Chinese AI talent and intellectual property, as Washington tries to limit Chinese tech firms’ access to advanced U.S. chips.

The NDRC’s office for reviewing the security of foreign investments said it would prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction.

It did not name Meta or other overseas investors in Manus.

The move comes weeks before a planned mid-May summit between Chinese President Xi Jinping and U.S. President Donald Trump in Beijing. China’s commerce ministry announced an investigation into the sale in January, days after Meta completed its December acquisition of the startup.

China rarely orders completed corporate deals to be unwound.

But shortly after the deal was announced, the ministry said it would assess and investigate the acquisition.

Companies involved in foreign investment, technology exports, data transfers abroad and acquisitions must comply with Chinese laws and regulations, the ministry spokesperson said at the time.

Manus’ two co-founders, CEO Xiao Hong and chief scientist Ji Yichao, were summoned to Beijing for talks with regulators in March and later barred from leaving the country, five sources familiar with the matter said.

After a $75 million fundraising round led by U.S. venture firm Benchmark in May 2025, Manus shut its China offices in July, laying off dozens of employees.

It then moved its operations to Singapore without seeking Chinese regulatory approval, people familiar with the matter said.

This enabled Manus’ parent company, Butterfly Effect, to re-incorporate in Singapore and bypass U.S. investment restrictions on Chinese AI firms, as well as Chinese rules limiting domestic AI firms’ ability to transfer their IP and capital overseas.

Manus staff have already moved into Meta’s Singapore offices, with projects going ahead despite the exit bans on the two executives, two sources familiar with the matter said.