China blocks Meta's acquisition of Manus: $2 billion deal terminated, Singapore export model declared ineffective

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On April 27, China's National Development and Reform Commission (NDRC) officially prohibited Meta from acquiring Manus, requiring the parties to terminate the transaction and ending a merger deal that began last December, valued at $2-2.5 billion. (Previous coverage: AI unicorn Manus clears community and lays off 70% of staff overnight; what is the truth behind the escape from China?) (Background: Meta announces acquisition of AI agent unicorn Manus, unlocking imagination for FB, IG, and Thread productivity) The four-month AI merger of the century, spanning Beijing, Singapore, and Silicon Valley, came to an end on April 27 under a ban issued by Chinese regulators. The Office of the Foreign Investment Security Review Working Mechanism of the NDRC explicitly stated in an official announcement that it had made a decision to prohibit the investment by foreign capital in the Manus project in accordance with laws and regulations, requiring the parties to cancel the acquisition. A report by China News Service on April 27 confirmed that this is the first time China has officially halted a large-scale cross-border M&A in the AI sector using the foreign investment security review mechanism. Meta has not yet made a public statement, but the transaction has been declared terminated at the legal level. The two core founders—CEO Xiao Hong and Chief Scientist Ji Yichao—have been prohibited from leaving the country since mid-January of this year and are currently under investigation by the NDRC and other departments, making their status even more complex. The speed at which this deal collapsed is almost as astonishing as the speed at which it was initially negotiated. From December 29 to 30, 2025, Meta announced the acquisition of Butterfly Effect, the developer of Manus, for $2-2.5 billion. The entire negotiation process reportedly took only 10 days. The news shocked Silicon Valley—the valuation soared 5 times in 8 months from its $500 million Series B, and the lean team of 78 people suddenly became one of the most expensive small teams in the global AI circle. However, Beijing's reaction was almost simultaneous. On January 8, 2026, China's Ministry of Commerce officially announced that it would review whether the transaction complied with regulations related to export controls, technology import/export, and outbound investment. In mid-January, Xiao Hong and Ji Yichao were banned from leaving the country, and a full-scale investigation began. On April 24, the NDRC issued a notice to top Chinese AI companies such as ByteDance, Moonshot AI, and StepFun, requiring them to refuse US capital unless explicit government approval was obtained—a move viewed by outsiders as a precursor to the April 27 ban. Three days later, the formal ban was implemented. Manus was developed by Butterfly Effect, founded in 2022, headquartered in Hong Kong, with R&D branches in Beijing and Wuhan. It claims to be the world's first truly autonomous general AI Agent—unlike the Q&A-style interaction of ChatGPT, Manus can autonomously plan and execute complex tasks: helping users schedule trips, analyze stocks, process documents, and screen resumes, completing end-to-end workflows with almost no human intervention. After its public release in March 2025, Manus quickly went viral, with invitation codes being traded for as much as 200,000 RMB on the secondary market. The financing roadmap clearly shows the trajectory of its soaring valuation: in January 2023, the Pre-Seed round was led by ZhenFund with $10 million; in April 2025, the Series B round was led by Benchmark, with a valuation of $500 million and $75 million in funding; 8 months later, Meta offered a purchase price of $2-2.5 billion, and 2026 revenue had already reached $125 million. The founders' backgrounds were also a highlight of the deal: Xiao Hong is an alumnus of Huazhong University of Science and Technology and later joined Meta as a Vice President; Ji Yichao is a co-founder of Monica.im and independently developed an iPhone browser app at age 17, and is seen as a representative of China's new generation of top technical talent. CNBC Beijing analysis attributes the core contradiction of this ban to "Singapore Washing"—an operational model of circumventing substantive regulation by migrating legal jurisdictions. Manus was originally developed in Beijing and was urgently moved to Singapore near the end of the deal, claiming to be a Singaporean company. Meta simultaneously promised to sever ties with Butterfly Effect's Chinese investors and close its China operations. However, Chinese regulators did not buy it, naming five major concerns in order: First, **loss of technical IP**: The core R&D team would transfer with Meta as a

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