China blocks Meta’s $2B Manus deal, moves to curb US investment in AI
What’s the deal? China has moved to actively restrict its leading technology companies — including top AI startups — from accepting US investment without explicit government approval, Bloomberg reported in April 2026.
Agencies including the National Development and Reform CommissionDealroom has a profile for this one. Try Dealroom → have instructed several private firms to reject US-origin capital in funding rounds unless cleared by regulators. Moonshot AI and StepFun received the guidance directly. ByteDance, China's most valuable private company and owner of TikTokDealroom has a profile for this one. Try Dealroom →, faces similar restrictions on secondary share sales to US investors.
The shift comes as Beijing has officially blocked Meta’s $2B acquisition of Manus, a Chinese-founded AI agent startup that had relocated to Singapore before agreeing to sell to the US social media giant in December 2025. The National Development and Reform Commission ordered the cancellation of the deal, citing concerns over illegal foreign investment and the transfer of sensitive technology. The transaction — which had been largely completed — is now being unwound following a multi-agency investigation. Manus co-founders Xiao HongDealroom has a profile for this one. Try Dealroom → and Ji YichaoDealroom has a profile for this one. Try Dealroom → remain under scrutiny and have been barred from leaving China.
Why now? The Manus deal exposed a vulnerability Beijing had not fully anticipated: Chinese AI startups restructuring offshore — typically through Singapore — to access Western capital and markets, effectively shedding their Chinese regulatory identity in the process. Chinese authorities now view this as a strategic leak of homegrown technology to a geopolitical rival.
The restrictions also arrive as Washington has tightened its own rules, limiting US investment in Chinese AI, semiconductor, and quantum companies since 2025. Beijing's response mirrors the logic of those controls — both governments are now actively trying to wall off their most sensitive technology sectors from the other's capital.
What could go wrong? The new restrictions risk severing Chinese AI companies from a significant source of funding. US pension funds, endowments, and venture firms have underpinned China's technology sector for two decades. Cutting off that capital — or forcing it through a government approval process — could slow fundraising for companies like Moonshot AI, which is seeking to raise up to $1B at an $18B valuation, and StepFun, which is considering a $500M Hong Kong listing.
There is also a risk of backfire. Analysts warn that heavy-handed intervention could push Chinese AI founders to establish companies outside China from the very beginning — forgoing government subsidies and access to China's engineering talent pool, but escaping regulatory reach entirely. Beijing's decision to block the Manus deal may accelerate the very exodus it is trying to prevent.
The signal: The Manus affair marks a turning point in how China manages its AI industry. For years, Beijing encouraged its most ambitious tech companies to go global and tap international capital. That era appears to be ending. Chinese AI is now explicitly a strategic asset to be protected — not just developed.
The implications extend well beyond Manus. US venture firms that have long invested in Chinese AI are now operating in an environment where their capital may be structurally unwelcome. And Chinese founders who built their companies hoping to access both ecosystems are being forced to choose sides earlier, and more permanently, than ever before.
Sources:
Bloomberg
Reuters
The Washington Post
The Financial Times
Bloomberg 27/04
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J.V. & A.M.
