Inside China's National Security Concerns Over Meta
Beijing has labeled Meta's $2 billion acquisition of AI startup Manus a "conspiratorial" attempt to hollow out China's technology base, escalating a months-long standoff over one of the most contentious cross-border AI deals in recent memory.
The assessment came from China's National Security Commission, a body led by President Xi Jinping whose reports are reviewed directly by senior Communist Party leaders, according to the Financial Times, which first reported the characterization on Wednesday. The finding, reached shortly after Meta announced the deal in December 2025, has since triggered a sweeping multi-agency investigation involving the National Development and Reform Commission, the commerce ministry, and China's antitrust watchdog.
A Deal Under Siege
Meta disclosed the Manus acquisition on December 29, 2025, snapping up the Singapore-based AI agent startup — founded by Chinese entrepreneurs Xiao Hong and Ji Yichao — for over $2 billion. Manus, which builds autonomous AI agents capable of completing complex digital tasks with minimal human input, had surpassed $100 million in annual recurring revenue within eight months of its launch.
China's commerce ministry first signaled its intent to review the deal in January, examining whether Manus's relocation from China to Singapore in mid-2025 was designed to circumvent export controls. That scrutiny deepened in March, when Chinese authorities summoned Xiao Hong and Ji Yichao to a meeting in Beijing with NDRC officials and subsequently barred both executives from leaving the country, according to reports from the Financial Times, Reuters, and The Wall Street Journal.
A Meta spokesperson told Reuters at the time that "the transaction complied fully with applicable law" and that the company anticipated "an appropriate resolution to the inquiry".
Chilling Effect on "Singapore Washing"
The probe has sent shockwaves through the Chinese tech sector and venture capital circles. As CNBC reported, the Manus deal had initially appeared to validate the strategy known as "Singapore washing," in which Chinese-founded startups relocate to the city-state to sidestep scrutiny from both Beijing and Washington. China's aggressive response has upended those calculations.
Some Chinese officials have privately expressed concern that heavy-handed enforcement could send a chilling signal to the broader tech sector and discourage entrepreneurship, according to the Financial Times. Over 100 Manus employees were integrated into Meta's Singapore office in early March, even as the regulatory review continued.
The case underscores the intensifying geopolitical contest over AI talent and technology, with Beijing increasingly treating advanced AI capabilities as strategic assets that cannot be allowed to migrate abroad.
