China orders Meta to unwind $2 billion acquisition of AI startup Manus

China's National Development and Reform Commission has formally ordered Meta to unwind its $2 billion acquisition of Manus, the agentic AI startup, in a statement issued by the Office of the Working Mechanism for Foreign Investment Security Review on Monday. The NDRC's instruction concludes a four-month regulatory process that began after the deal was announced in December 2025. Manus co-founders Xiao Hong and Ji Yichao have been barred from leaving China since March 2026 after being summoned to Beijing for questioning by the NDRC on potential violations of foreign direct investment rules. Manus was founded by Xiao Hong and Ji Yichao in China and incorporated in Singapore. The company emerged in early 2025 as an agentic AI platform capable of autonomously executing complex multi-step tasks across web browsers, code editors, and file systems. It raised $75 million from Benchmark in April 2025 and was acquired by Meta in a deal the Wall Street Journal reported as valued at over $2 billion. The Chinese government's concern centered on what category of asset was being transferred. China's Ministry of Commerce launched a formal probe in January 2026, framing its review around export control laws and whether an AI team constitutes a technology export when the asset being transferred is not a conventional product but a team, a system, and operational know-how embedded in a Chinese-founded organisation. The Washington Post reported last week that the Manus case had revealed what Chinese tech workers described as "a new red line": the point at which a Chinese-founded, Singapore-incorporated AI company becomes subject to Chinese state oversight over its ability to exit to a US acquirer. That red line has now been formalised by Monday's cancellation order. The Meta-Manus case is the direct origin of the broader Chinese policy to require government approval before Chinese tech companies accept US capital. The policy, reported by Reuters when it was announced on Thursday, has now received its first concrete enforcement action in the form of Monday's cancellation order.