China’s National Development and Reform Commission on Monday blocked Meta’s $2 billion acquisition of Manus, the agentic AI startup that was founded in China and later relocated to Singapore. The NDRC ordered all parties to unwind the transaction, according to Bloomberg and confirmed by CNBC, Reuters, and the New York Times.

The decision marks the first time Beijing has used its foreign investment review authority to kill a major AI agent acquisition, extending US-China tech rivalry from chips and foundation models into agentic AI companies.

The Deal and the Probe

Meta announced the Manus acquisition in late December. The company builds general-purpose AI agents capable of autonomous web navigation, market research, coding, and data analysis. Manus reached $100 million in annual recurring revenue within eight months of its product launch, claiming the title of fastest startup to hit that milestone from zero, according to CNBC.

Manus was originally developed by Beijing Butterfly Effect Technology, founded in 2022. After its launch in March 2025, the startup relocated its top engineers and headquarters to Singapore, a move initially cleared by the NDRC, according to the Financial Times. But Meta and Manus did not inform Chinese authorities before signing the deal in December, per Forbes.

In January, China’s Ministry of Commerce launched an investigation into whether the acquisition violated export control and foreign investment laws. The NDRC subsequently ordered Manus co-founders Xiao Hong and Ji Yichao to meet officials in person and barred both from leaving China until the review concluded, according to the Wall Street Journal.

The Singapore-Washing Problem

The blocking has broader consequences for the “Singapore-washing” model, where Chinese AI startups relocate to the city-state to access Western investors and models while avoiding scrutiny from both Beijing and Washington. CNBC reported that the Chinese government’s intervention in the Manus deal alarmed tech founders and venture capitalists who were counting on the same relocation strategy.

The message from Beijing is now explicit: relocating a company’s headquarters does not remove Chinese regulatory jurisdiction over technology originally developed in China. For agent startups specifically, this creates a new constraint. Agentic AI capabilities, which combine autonomous reasoning with tool use and task execution, appear to fall under Beijing’s expanding definition of strategic technology subject to export controls.

Timing and Geopolitics

The decision lands weeks before President Trump’s planned summit with Xi Jinping in Beijing, according to Forbes. The broader US-China AI conflict has escalated in parallel: the U.S. State Department issued a diplomatic cable last week warning embassies about alleged Chinese AI model theft through distillation, and Washington continues blocking sales of advanced AI chips to China.

APEC Senior Officials Meeting Chairman Chen Xu told reporters that it is “important that all parties act in a spirit of mutual benefit,” adding that proper handling of the issue “can help facilitate more substantive discussions in APEC,” according to CNBC.

Agent M&A as Geopolitical Lever

This is the first regulatory kill of an agentic AI acquisition by either government. The precedent matters because the agent startup ecosystem is global and increasingly attractive to acquirers. Manus raised $75 million from U.S. venture firm Benchmark in April 2025. The company’s rapid revenue growth made it a high-profile target. Beijing’s decision to block the deal signals that agentic AI companies with Chinese origins will face the same export scrutiny as chip companies, model developers, and semiconductor equipment makers.

For Meta, the deal was intended to accelerate AI agent integration across its consumer and enterprise products, including its Meta AI assistant. The company has not publicly commented on the NDRC’s order, according to CNBC. Meta shares were 0.2% lower in premarket trading.