China's Cautionary Stand Against US Tech Firms in AI

China has dispatched a clear message to American technology companies: refrain from luring away our AI professionals and technological advancements. This caution comes in the wake of China's investigation into Meta's planned acquisition of Manus, a move deemed significant by market analysts.

Meta's Acquisition Under Scrutiny

Chinese authorities announced this investigation during a Thursday press briefing, emphasizing that the acquisition will be evaluated for compliance with national export regulations, as stated by the Commerce Ministry. Manus, introduced by Butterfly Effect in China last year, gained international attention due to its development of a versatile AI entity capable of operating with minimal human intervention. The company later moved its operations to Singapore in mid-2025.

In December, Meta set forth plans to secure Manus, intending to sever all former associations with China. The transaction is speculated to surpass $2 billion. As of now, Business Insider's request for comments from Meta remains unanswered.

Concerns Over Regulatory Evasion

This is not the first instance of regulatory friction between China and the United States, but analysts highlight the broader implications of this investigation, pointing to a trend known as 'Singapore washing,' where companies relocate from China to Singapore, ostensibly to minimize regulatory audits.

Prominent firms such as ByteDance, the umbrella company for TikTok, and fashion powerhouse Shein have recently established their headquarters in Singapore.

Beijing's latest probe is also seen as a strategic maneuver to dissuade Chinese AI companies from establishing bases in the US.

Wendy Chang, a senior analyst at the Mercator Institute for China Studies, interprets the probe as an attempt to shield Chinese intellectual assets from being acquired by international, especially American, businesses.

Shifting Frontiers in Technology

Beyond hardware like Nvidia's semiconductors, which have been restricted by US trade controls, the focus of contention has shifted towards AI models, workforce, and corporate execution, according to Murthy Grandhi from GlobalData.

Hanna Dohmen from Georgetown’s Center for Security and Emerging Technology points out that while the probe was somewhat expected, the specific focus on intellectual property and talent mobility is particularly intriguing.

The AI sector's competitive edge hinges on attracting elite talent, a fact underscored by substantial investments, such as Meta’s $14 billion funding in Scale AI, leading to Alexandr Wang overseeing Meta's internal AI projects.

Should the Manus inquiry deepen, it could reflect stringent control over outbound AI transfers, as suggested by Grandhi, potentially accelerating the split into separate AI ecosystems in the US and China.

Uncertain Investigation Outcomes

The duration and final decision of China’s investigation remain uncertain, with some past Ministry investigations extending over a year.

Grandhi speculates that approvals may come with conditions rather than outright rejections, signaling caution to other international firms considering similar such transactions.