China Opens Review of Meta’s Planned Manus AI Acquisition, Testing Reach of Export Controls

China is scrutinizing Meta’s planned $2 billion-plus acquisition of Manus, an artificial intelligence startup that began in Beijing and later re-incorporated in Singapore, testing how far Beijing’s export controls reach into the global market for advanced algorithms.

Preliminary review by commerce ministry

Officials at China’s Ministry of Commerce have opened a preliminary review into the deal, according to reports by the Financial Times and Reuters on Jan. 7, 2026. The officials are examining whether Manus’ relocation and eventual sale to the U.S. tech giant should have triggered Chinese technology export approval, according to people briefed on the discussions.

The review has not yet been elevated into a formal case under China’s Export Control Law. Still, it could delay or reshape a transaction Meta announced in late December and has cast as central to its effort to deploy powerful AI “agents” across its social networks and devices.

It also signals that Beijing may claim legal authority over some AI technologies even after a company shifts its headquarters and intellectual property out of China.

Manus’ rise—and move to Singapore

Manus is an “agent” company whose technology is designed to carry out complex tasks on behalf of users. Founded in Beijing around 2022 by entrepreneur Xiao Hong, Manus began as part of a company called Butterfly Effect, best known for a chatbot product, Monica.im.

From the start, Manus was positioned as more than a conversational assistant. The company marketed its software as a “virtual colleague” that could autonomously screen job applications, plan travel, analyze stock portfolios, write reports, and even spin up temporary virtual computers to run code—often with just a brief prompt.

When Manus publicly launched in early 2025, the product went viral on X and in Chinese tech circles. Commentators compared the popularity to a “second DeepSeek moment,” a reference to another Chinese AI model that drew global attention. Within months, Manus claimed millions of users and more than $100 million in annualized subscription revenue.

By mid-2025, however, the company began to distance itself from its home market. Manus’ parent, reorganized as Butterfly Effect Pte. Ltd., moved its headquarters to Singapore, according to corporate records and media reports. The company reduced staff in Beijing and Wuhan by roughly two-thirds, hired dozens of employees in Singapore and elsewhere in Asia and the United States, and quietly stopped offering services in mainland China. Chinese-language websites and social media accounts tied to Monica and Manus were shuttered or scrubbed.

People familiar with the company’s thinking have said the shift was driven in part by tightening U.S. restrictions on investment in Chinese AI companies and by controls that have limited access to advanced chips in China. Singapore offered easier access to international capital, cloud infrastructure and global customers, while still being perceived as politically neutral.

Meta’s deal and AI strategy

Meta said in December that it had agreed to acquire Manus, calling it “one of the leading autonomous general-purpose agents.” Meta did not disclose a price, but people with knowledge of the transaction have put the value between $2 billion and $3 billion. Meta and Manus did not respond to requests for comment this week on the Chinese review.

On Dec. 29 and 30, Meta said it would acquire Manus and fold its team into the company’s broader AI organization. Xiao is expected to join Meta as a vice president overseeing agent technology.

Meta executives have said Manus will continue to operate a standalone subscription service, while its underlying agent technology will be integrated into core products including:

• Meta AI in Facebook, Instagram and WhatsApp
• Digital assistants for Ray‑Ban smart glasses
• Future augmented- and virtual-reality headsets

“This acquisition will help accelerate our progress in bringing general-purpose AI agents to billions of people and millions of businesses,” Meta said at the time.

The deal comes as Meta expands AI spending, projecting $60 billion to $65 billion in capital expenditures in 2025, largely for data centers and chips. Chief Executive Mark Zuckerberg has said the company could ultimately spend “hundreds of billions” of dollars on AI infrastructure over time, in pursuit of what he has called “personal superintelligence”—AI that can live on users’ devices and carry out tasks on their behalf.

What China is examining

To make the acquisition more palatable to U.S. national security officials, Meta and Manus emphasized that the company would fully exit China. People familiar with the transaction said Meta would buy out Chinese investors and shut down services for mainland users. A Meta spokesperson said there would be “no continuing Chinese ownership interests in Manus AI,” according to an interview with Fortune.

That effort to shed Chinese ties now faces different scrutiny.

At the heart of the ministry review is China’s expanding system of technology export controls. Under the Export Control Law (effective in 2020) and a separate catalogue listing technologies whose export is prohibited or restricted, companies must apply for government licenses before transferring certain know-how abroad.

A 2020 revision to that catalogue added categories covering “personalized information push service technology based on data analysis” and “artificial intelligence interactive interface technology.” Legal scholars said at the time those entries were broad enough to cover recommendation algorithms used by TikTok and certain conversational and user-facing AI systems.

Beijing invoked similar rules in 2020 when the Trump administration pressed ByteDance to sell TikTok’s U.S. operations, arguing that any deal involving TikTok’s recommendation engine would require a license.

In the Manus case, officials are focusing on two main issues, according to people familiar with the matter:

1. Whether Manus should have applied for an export license when it moved staff, source code or model weights from China to Singapore in 2025.
2. Whether selling that technology to Meta constitutes an indirect export to the United States requiring Chinese approval.

Authorities have not publicly accused Manus of violating the law, and there is no indication they intend to block the transaction outright. Trade lawyers say regulators could still act short of stopping the deal—such as issuing retroactive licenses, levying fines, or imposing conditions on the use or further transfer of specific technologies.

Wider implications for AI deals and regional hubs

The review is being closely watched by founders and investors on both sides of the Pacific. For Chinese entrepreneurs, it could clarify whether re-domiciling and rebranding are enough to avoid Chinese oversight when seeking Western buyers. For global tech giants, it raises the prospect that acquisitions of AI firms with Chinese roots will carry a new layer of political and legal risk.

Singapore also has a stake. The city-state has become a favored base for Chinese-born AI engineers and startups seeking proximity to U.S. cloud providers and capital markets without being headquartered in either the U.S. or China. If Beijing signals it will treat some of those firms’ technology as subject to Chinese export rules even after they move, it could complicate Singapore’s ambitions to be a neutral AI hub.

The Manus review unfolds against a broader backdrop of escalating technology frictions. Washington has tightened controls on exports of advanced chips and certain AI technologies to China and moved to force the Chinese-owned TikTok platform into non-Chinese hands or out of the U.S. market. Beijing has responded by restricting exports of select critical minerals and drone technologies and strengthening its own toolkit of sanctions and export controls.

Meta has little consumer business in mainland China—Facebook, Instagram and WhatsApp have been blocked for years—but it earns significant advertising revenue from Chinese exporters targeting foreign consumers. Executives in Washington and Beijing will be watching whether the Manus case sets broader precedents.

For now, Meta’s planned integration of Manus’ agent technology is proceeding on paper as Chinese officials review how the startup relocated. Whatever Beijing ultimately decides, the message to AI founders and buyers is becoming clearer: when algorithms are treated as strategic exports, moving a company’s legal address may not be enough to move its technology beyond the reach of the state that saw it born.