China has blocked the acquisition of Singapore based startup Manus AI by tech giant Meta over alleged violation of the country’s regulations, as the startup founded in early 2024 had Chinese origins.

In a brief statement released by China’s National Development and Reform Commission (NDRC) on Monday, the $2 billion dollar acquisition deal by Meta Inc of Manus AI stood cancelled as the body informed that it will ask both parties to fall back on the deal.

According to NDRC, the decision to prohibit foreign investment in Manus AI was taken in accordance with China’s laws and regulations.

Founded in 2025 under the company name Butterfly Effect Pte. Ltd in Singapore, Manus AI was developed initially by its founder Xiao Hong in China. Post its acquisition in December 2025 by Meta, Chinese authorities had raised objections whether the agentic AI system of Manus was developed in China using its digital infrastructure.

In January 2026, China announced a formal enquiry against Manus AI acquisition deal on grounds whether it violated the national security of technology export regulations.

According to a CNBC report, the acquisition of Manus AI, a startup with Chinese roots, by a U.S. based tech giant, had raised eyebrows in Washington DC as well. Amid strict regulations against China based companies to do business with the west, Manus AI had emerged as an example of the “Singapore white-washing” model where companies register themselves in the country to avoid US sanctions.

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