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The Commerce Ministry and other relevant departments in China are planning to investigate whether the acquisition of Manus, a Singapore-based AI startup founded by Chinese entrepreneurs, by a major U.S. tech company complies with Chinese laws on export controls, technology trade, and foreign investment, according to a recent official briefing.
The government has consistently emphasized its support for companies engaging in lawful international cooperation and cross-border business activities. However, activities like outbound investments, technology exports, cross-border data transfers, and overseas mergers and acquisitions must adhere to Chinese legal procedures and regulations.
Manus announced on December 30, 2025, that it is partnering with the U.S.-based company. The startup will offer its general-purpose AI agent to businesses through a subscription model, marking its first major entry into enterprise AI solutions. The founder and CEO of Manus, Xiao Hong, will join the parent company as a vice president based in Menlo Park.
The acquisition is reported to be worth several billion dollars. Following the deal, the U.S. company reportedly required Manus to cut all ties with China, including capital, operations, and data sharing. After the announcement, U.S. stock shares of the parent company initially rose slightly but declined after reports indicated Chinese regulators would review the transaction.
Unlike traditional antitrust or national security reviews, export control regulations focus on whether Chinese-developed technologies subject to export restrictions are shared with foreign entities without proper authorization, regardless of whether the deal involves equity transfer or is based in China.
The AI agent developed by Manus, created through a joint effort between teams in Beijing and Wuhan, was released globally in March 2025 and quickly became a trending topic on social media.
Between 2023 and 2025, the company completed four funding rounds, with investments from ZhenFund, Tencent, HongShan, Meituan’s founder Wang Huiwen, and Benchmark Venture Capital. The funding raised the company’s valuation from around $14 million to approximately $500 million.
Following an investment from Benchmark, Manus announced in June that it would relocate its headquarters to Singapore, rebranding as Butterfly Effect Pte. The company laid off most of its staff in China, retaining about 40 core technical employees who moved to Singapore. This shift was driven by the fact that its primary AI models, like Anthropic’s Claude, are unavailable in China, limiting access for Chinese users.
Currently, in the AI sector, the focus in China includes algorithms, model architectures, training approaches, and engineering solutions, all closely monitored under the country’s updated export control regulations. The revised Catalogue of Technologies Prohibited or Restricted from Export, updated in July 2025, includes several AI-related technologies and control points.
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