China’s leading economic authority, the National Development and Reform Commission (NDRC), announced on Monday that it has prohibited Meta’s $2 billion takeover of Manus, an AI startup created by Chinese engineers that moved to Singapore prior to Mark Zuckerberg’s acquisition attempt late last year.

This decision signifies one of China’s most notable actions regarding an international transaction, reflecting tensions that extend beyond U.S.-China relations and into the larger AI sector. For Meta, this could significantly hinder its aspirations within the rapidly evolving AI agents market.

Without providing any justification, the NDRC mandated that both parties completely dissolve the agreement.

“The National Development and Reform Commission (NDRC) has decided to prohibit foreign investment in the Manus initiative in accordance with existing laws and regulations, and has instructed the involved parties to rescind the acquisition,” it stated.

However, the circumstances are far from simple. Approximately 100 Manus staff members had already transitioned into Meta’s Singapore offices as of March, with the founders taking on leadership roles. CEO Xiao Hong is now in direct communication with Meta COO Javier Olivan. Manus CEO Hong and Chief Scientist Yichao Ji are reportedly subject to exit restrictions, preventing them from departing mainland China.

“The transaction complied fully with applicable law. We expect a favorable resolution to the investigation,” a representative from Meta expressed to TechCrunch.

Founded in 2022 by Hong, Ji, and Tao Zhang, Manus moved its headquarters from China to Singapore around mid-2025. Just a few months later, Meta expressed interest. The company disclosed its acquisition of Manus in December 2025 for approximately $2 billion to $3 billion, intending to integrate its agent technology directly into Meta AI.

Meta has committed to acquiring the Singapore-based AI startup Manus, with the transaction requiring a complete exit from Chinese ownership and operations, according to Nikkei Asia. However, the company’s roots are tied to China. The founders previously set up its parent company, Butterfly Effect, in Beijing in 2022 before relocating to Singapore. This history has attracted scrutiny in Washington, where Senator John Cornyn has raised alarms regarding Benchmark’s investment in the company, questioning the appropriateness of American capital supporting a firm linked to China, as highlighted by TechCrunch, referencing Cornyn’s comments on X.

Manus did not reply to TechCrunch’s request for a statement.