China has blocked Meta's $2 billion acquisition of AI startup Manus, a move analysts interpret as Beijing asserting greater control over technology deemed strategically vital, even after companies relocate offshore.
The National Development and Reform Commission halted the deal, ordering its unwinding months after it was sealed. Manus, founded by a Chinese team, had moved its headquarters to Singapore and structured the deal through a Singapore-registered entity, yet Chinese regulators intervened.
This case signals a new norm where relocating offshore may not shield Chinese firms if their technology, talent, and data remain tied to China. Experts note that regulators see through offshore structures to the technology's Chinese origin, subjecting any China-founded AI startup to intense national security scrutiny when a US buyer is involved.
Beijing's decision is viewed as part of an intensifying US-China rivalry in strategic technologies like AI. China is adopting a targeted approach, restricting a narrow set of high-value technologies critical to national security, similar to the US "small yard, high fence" strategy. Concerns over the transfer of Chinese-developed AI capabilities and foreign control over these assets are central to the decision.
Analysts believe this move is symbolic, intended to deter other firms. It underscores a shift from regulating company location to controlling ultimate ownership of critical technology, talent, and data. Offshore hubs like Singapore may face challenges as neutral bases for Chinese firms.
The implications extend to how Chinese startups raise foreign capital and structure overseas expansion, potentially narrowing channels for cross-border deals involving sensitive sectors. Beijing's actions are pushing more Chinese startups toward onshore or 'friendly' capital instead of US financing.