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(Sharecast News) - China's state planner has ordered Meta to unwind its $2bn acquisition of Manus, a Singapore-incorporated artificial intelligence startup with Chinese roots, marking a significant escalation in Beijing's efforts to prevent technology and talent from flowing to Western competitors.
The National Development and Reform Commission said on Monday it had decided to prohibit foreign investment in Manus and instructed the parties involved to withdraw from the deal, which Meta announced in December.
It offered no detailed explanation for the ruling.
Manus was founded by Chinese engineers but relocated its headquarters to Singapore in 2025 as part of a broader trend among Chinese companies seeking to distance themselves from both Beijing and Washington scrutiny.
The company develops general-purpose artificial intelligence agents - tools that can execute complex tasks such as market research, coding and data analysis - and was hailed as China's next DeepSeek after launching its first AI agent in March 2024.
The startup achieved $100m in annualised revenue within eight months of product launch, which it claimed at the time made it the fastest company globally to reach that milestone from zero.
Meta announced the acquisition after this rapid growth, saying it sought to "accelerate AI innovation for businesses" and integrate advanced automation into its consumer and enterprise products, according to CNBC.
However, the ruling came as Beijing and Washington competed intensely over artificial intelligence capabilities and talent.
According to the Financial Times, Manus co-founders Xiao Hong and Ji Yichao were barred from leaving China as regulators reviewed the deal following its December announcement, when Chinese officials said they would investigate whether the acquisition violated foreign investment rules and export control requirements.
The deal has been largely completed, with Manus employees already integrated into Meta's teams in Singapore and capital transferred to investors including Tencent Holdings and other Chinese venture firms.
It remained unclear how the transaction could be unwound.
Meta said the acquisition "complied fully with applicable law," according to CNBC.
The move came weeks before a planned summit between US president Donald Trump and Chinese leader Xi Jinping in May, amid wider jockeying for advantage over sensitive technologies.
Chinese regulators recently instructed other major AI firms including Moonshot AI and Stepfun to reject capital of US origin unless explicitly approved, according to Bloomberg, signaling that Beijing intended to prevent a repeat of the Manus acquisition.
Reporting by Josh White for Sharecast.com.