China’s state media on Tuesday defended the government’s decision to block U.S. tech giant Meta from acquiring Chinese-founded AI startup Manus, calling the move “reasonable, lawful and consistent with international practice.”
China’s National Development and Reform Commission said the previous day it had decided, “in accordance with the law,” to ban foreign capital from acquiring the Manus project and had asked Meta to withdraw from the deal.
Manus, founded in China, drew attention after unveiling a general-purpose AI agent in March last year and was at one point dubbed “a second DeepSeek.” Months later, it raised U.S.-linked funding and moved its headquarters to Singapore, prompting suspicions it was trying to sidestep U.S. and Chinese regulations. After Meta announced late last year it would buy Manus for about $2 billion, concerns grew in China about the loss of domestic talent and technology, and regulators moved to halt the transaction.
In an editorial, the state-run Global Times said the central issue was that Manus, which grew using Chinese engineers and infrastructure, took U.S. investment and then cut ties with China. The paper said many in the industry viewed the shift as “Singapore washing” — relocating to Singapore to avoid scrutiny from both Washington and Beijing — and noted allegations the deal amounted to “acquihiring,” or buying a company mainly to secure its staff.
The editorial said the government had not disclosed specific reasons for the block but argued China had sufficient jurisdiction and legal grounds. It said that even if Manus is incorporated in Singapore, its early research and development took place in China and key data are also based there, making the movement of people, technology and data directly tied to national interests.
It added that whether China has jurisdiction depends on the company’s links to China in technology, talent and data and their relationship to national interests, citing measures on foreign investment security reviews, export-control technology lists and the foreign trade law as grounds for requiring a security review.
The Global Times also said the action aligns with international practice, arguing that cross-border mergers involving sensitive technologies — including AI, data, algorithms, core software and key personnel — are not merely commercial transactions and that countries have broadly tightened investment security reviews.
Markets are watching whether the decision can force the deal to be unwound. Under China’s foreign investment security review measures announced in late 2020, outcomes fall into three categories: “approval,” “conditional approval” and “investment ban.” If parties refuse to comply, authorities can order the disposal of equity or assets within a set period, place the party on a bad-credit record in a national credit information system and impose joint disciplinary measures as provided by regulations.
Bloomberg said it was unclear whether the deal would collapse. Laila Kawaaja, head of research at Gavekal Dragonomics, said the decision carries “significant symbolic meaning” but that canceling the transaction would be difficult in practice because capital and technology transfers have already progressed substantially. Some observers said China could seek influence by restricting overseas activities by Manus executives or pressing for reduced roles or resignations on the Meta side.
Kawaaja said the move also signals a clampdown on Chinese startups shifting headquarters to places such as Singapore to attract global investment. She called it a strong warning against a “de-China strategy” aimed at accessing overseas funding and markets, adding that China appears willing to allow global expansion while tightly controlling the outflow of talent and technology.
* This article has been translated by AI.
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