Manus, an AI agent released by Chinese start-up Monica Photo: VCG

The widely watched case of US tech giant Meta acquiring Chinese-founded AI startup Manus has taken a new turn. On April 27, the National Development and Reform Commission announced Monday that the office of the foreign investment security review working mechanism has, in accordance with laws and regulations, issued a decision to prohibit foreign investment in the Manus acquisition project and has ordered the parties involved to revoke the acquisition deal. This decision is reasonable, lawful, and necessary. It reflects the Chinese government's fulfillment of its regulatory responsibilities and aligns with the international norm of strengthening security reviews in strategic technology sectors.

In March 2025, the startup Butterfly Effect launched Manus. As the world's first general AI agent, Manus became an overnight sensation with a demo video, and access codes were, at one point, resold for tens of thousands of yuan. As a result, Manus was briefly regarded by the industry as "the second DeepSeek." Just a few months later, however, Manus relocated its headquarters to Singapore, drastically downsized its domestic team, retained only core technical staff, and completely ceased services and operations within China. In December last year, Meta announced with great fanfare that it would acquire Manus for approximately $2 billion, making it the third-largest acquisition in Meta's history.

The deal had been controversial from the outset. The biggest concern was that Manus, a company built on Chinese engineers and infrastructure, appeared to be "cutting ties" with its Chinese roots after securing US investment. At the time, many in the industry suggested that this could be a case of regulatory evasion through a "Singapore washing" strategy. In addition, the deal raised questions about "acquihiring," with critics arguing that the primary valuation rested on the team rather than the company itself. A US law firm noted that talent retention is a core clause in such transactions, suggesting the acquisition essentially functioned as a recruitment strategy.

Given that the deal involves China, the US, and AI, China's decision has drawn significant attention and, in some cases, overinterpretation. Although the Chinese side has not yet disclosed the specific reasons for blocking the acquisition, three points are already clear.

First, China has the right to intervene in this acquisition in accordance with laws and regulations. Some argue that Manus currently has no team in China and no products for the domestic market, and that its early development merely took place in China; therefore, they label China's move to halt the acquisition as an exercise of "long-arm jurisdiction." So-called "long-arm jurisdiction" refers to the extension of a country's domestic laws beyond its borders, often using those laws to impose sanctions on third parties. However, China's decision regarding the Manus acquisition is not of this nature. Although Manus had become a "Singapore-based company" when Meta announced the acquisition, the key issue is not where the company is registered or where its team is currently based. Rather, it lies in the extent of its technological, talent, and data links with China, and whether the transaction could harm China's industrial security and development interests. Manus's early R&D was conducted in China and that its core data originated there. These factors mean that the movement of its personnel, technology, and data is inevitably tied to China's interests. Under rules issued on security review of foreign investment, China's catalog of technologies prohibited and restricted for export, as well as the revised Foreign Trade Law, the export of such technologies and related cross-border transfers and investments are subject to security review and assessment until an approval is obtained. China therefore has a solid and well-founded legal basis to exercise jurisdiction over this transaction.

Second, China's move to halt the deal is consistent with international practice. Some Western media outlets claim that the decision is driven by geopolitical competition with the US and targets American companies. This line of argument has a strong "seeing others as you are yourself" implication. Globally, cross-border mergers and acquisitions involving AI, data, algorithms, key software, core teams, and sensitive technologies have never been treated as ordinary commercial transactions. In recent years, countries have broadly strengthened investment security reviews, covering not only M&A deals but also greenfield investments such as new projects, and extending to sectors such as biomedicine and equipment manufacturing. China's regulatory approach is fully in line with international practice.

Third, halting this acquisition does not mean that China's business environment is "tightening." China continues to optimize its foreign investment environment, having reduced the negative list for foreign investment multiple times, and is consistently easing access for foreign investment in sectors such as services and high-end manufacturing. Prohibiting a single sensitive AI-related acquisition is not contradictory to encouraging foreign investment and business operations in China. On the contrary, clarifying safety boundaries can provide reassurance to compliant foreign investors and enhance long-term confidence. The more open the economy becomes, the greater the need for improved regulations, clearer boundaries, and more stable expectations. The EU, the US, and Japan all have similar mechanisms, yet this has not prevented them from becoming hot global investment destinations. As the world's second-largest recipient of foreign investment, China's legal safety reviews and expanded cooperation are complementary and mutually reinforcing; both are essential.

AI is at the core of a new round of global industrial transformation. Leveraging its vast market advantages, complete industrial chain support, abundant application scenarios, and improving policy framework, China's AI industry has entered a phase of rapid development, with a sustained burst of innovative vitality, making it a fertile ground for global AI innovation. We hope that more technology and innovation enterprises, including Manus, can find their place in this blue ocean in China, develop confidently, grow larger and stronger, and achieve better development and breakthroughs.