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China’s top economic planning body moved Monday to cancel Meta’s acquisition of AI agent startup Manus, issuing an order through the Office of the Working Mechanism for Security Review of Foreign Investment that prohibits the deal and requires all parties to unwind the transaction.

The National Development and Reform Commission did not name Meta or Manus in its statement, but the target was unambiguous: the December 2025 acquisition announced at a valuation estimated above $2 billion.

What the NDRC Ordered

The commission declared it will “prohibit the foreign investment in the acquisition of the Manus project” and requires the parties to “withdraw the acquisition transaction.” No timeline for unwinding was specified. No penalty was disclosed.

The regulatory review had been underway since January, when Chinese authorities signaled they were examining whether the deal violated Beijing’s foreign investment rules.

The Problem: Integration Is Already Complete

The order arrives in a structurally awkward position. By the time China moved, the deal had closed in full. Capital was transferred to selling shareholders. Manus’s team had joined Meta’s AI division and was working from the company’s Singapore office. Meta had begun integrating Manus agent technology into its internal systems.

Unwinding a completed acquisition with dispersed shareholders, transferred capital, and an integrated technical team is not a procedural step — it is an engineering and legal problem with no clear resolution path. Meta said the transaction “complied fully with applicable law” and added it “anticipates an appropriate resolution,” without specifying what that would look like.

The Founders

The most acute dimension of the order involves personnel. Chief executive Xiao Hong and chief scientist Ji Yichao, both Chinese citizens normally based in Singapore, were summoned to Beijing in March for a regulatory meeting. They were told they could not leave the country while the review was ongoing.

Both are now Meta employees. Both remain in China.

Why Beijing Moved

Manus was founded in Beijing as Butterfly Effect Technology in 2022. Its AI agent — capable of autonomous task completion across web research, trading analysis, property searches, and coding — was widely celebrated in China as a homegrown rival to Western systems when it launched in March 2025.

The company’s subsequent moves undermined that standing: Singapore headquarters, Singapore-resident team, and ultimately a sale to a US company that explicitly said there would be “no continuing Chinese ownership interests in Manus” and that Manus would cease operations in China.

Chinese authorities framed the acquisition as a threat to national AI talent retention and technology transfer control. Beijing also saw precedent risk: other Chinese-founded AI startups incorporated abroad or considering US capital would watch the Manus outcome.

In response to the deal announcement, Chinese agencies began notifying AI companies that they must reject US-origin capital in funding rounds unless explicitly approved by the government. ByteDance was among those receiving these notifications.

Timing and Geopolitics

The NDRC order landed less than a month before President Trump’s planned summit with Xi Jinping in Beijing — a meeting expected to address trade and technology controls. The timing adds a signal to the substance: China is asserting control over AI asset transfers at the moment cross-border tech competition is under direct diplomatic negotiation.

An Omdia analyst described Beijing’s approach as deliberate: “China is showing the world that it is willing to play hardball when it comes to AI talents and capabilities, which the country views as a core national security asset.”

Structural Significance

The Manus block is the Chinese-side mirror image of US export controls on AI chips. Washington restricts what technology China can receive. Beijing is now restricting what AI capabilities — and which founders — can leave.

The practical consequence for US AI strategy: acquisition of Chinese-founded AI companies, even those legally incorporated outside China, now faces a credible regulatory reversal risk at the point of completion. The Manus case will be studied closely by any US company considering a similar deal.