China’s National Development and Reform Commission (NDRC) on April 27 ordered Meta to unwind its over $2 billion acquisition of Manus, a Singapore-incorporated artificial intelligence (AI) agent startup that Chinese founders built in Beijing. The block effectively ends the “Singapore-washing” model, where founders relocate to Singapore to sidestep US-China regulatory scrutiny, and signals that Beijing claims jurisdiction over AI companies based on where founders built them, not where they incorporate.

What happened:

• Meta announced over $2 billion acquisition of Manus in December 2025, stating that “there will be no continuing Chinese ownership interests in Manus AI following the transaction.” China’s commerce ministry launched a review in January 2026, examining whether the deal violated technology export and outbound investment laws.
• Regulators focused specifically on whether Manus transferred its core AI agent intellectual property to its Singapore entity without the government approvals required under China’s Regulations on Technology Import and Export Administration. Beijing-based lawyer Yuan Cao put the legal position plainly: “Where you build your product matters more than where the holding company is registered.”
• In March 2026, NDRC officials summoned Manus chief executive Xiao Hong and chief scientist Ji Yichao to Beijing and barred them from leaving the country, a direct enforcement tool that signals how seriously Beijing treats intellectual property (IP) transfer reviews.
• On April 27, the NDRC issued its formal block, stating it had decided “in accordance with the law to prohibit foreign investment in the acquisition of the Manus project.” It did not name Meta. Meta, however, said the transaction “complied fully with applicable law.”

Why Beijing acted now: US export controls restricted Huawei to 200,000 AI chips in 2024, against Nvidia’s one million downgraded H20 chips sold to China alone that year. Washington also banned DeepSeek from US government devices in March 2025, restricting Chinese AI software alongside hardware. Beijing has mirrored this: China banned US chips from government computers in 2024. The Manus block is Beijing’s symmetrical counter, controlling the models and talent Chinese founders built the same way Washington controls the chips China needs to build AI.

The regulatory framework behind the block: The block relies on Decree 835, issued on April 13 with immediate effect and no grace period. The Regulations on Countering Foreign Improper Extraterritorial Jurisdiction assert China’s right to exercise jurisdiction over conduct with an “appropriate connection” to China.

This undefined standard gives Beijing wide discretion: a company does not need to operate in China for authorities to assert jurisdiction over its decisions. While the NDRC did not cite a specific provision in its block statement, the April decrees form the broader legal architecture within which the decision sits.

Decree 835 also creates a formal Malicious Entity List targeting foreign organisations that promote or implement foreign sanctions measures. Together, these tools shift China from reactive blocking to active extraterritorial assertion. The Manus block marks the first high-profile use of this framework against an AI company.

Why Indian AI founders should pay attention:

• The structure is identical. Many Indian AI startups use a Singapore holding company to access foreign capital while keeping engineering teams and IP development in India. Manus followed the same model. Beijing’s position was clear: the IP originated in China, so China retains jurisdiction over where it goes, regardless of the Singapore entity’s incorporation.
• India has no equivalent framework, and the stakes are high. Unlike China, India has no binding law governing what Indian-origin AI companies must disclose before a foreign acquisition closes. MeitY’s AI Governance Guidelines remain non-binding, India has no standalone AI law, and the DPDP Rules 2025 say nothing about acquisition-related IP transfers. Indian regulators currently have no statutory basis to scrutinise a deal before it closes and no playbook to unwind one after.
• The gap is consequential. The government funds 12 organizations including Sarvam AI and BharatGen to build foundational models on Indian datasets under the IndiaAI Mission. If any attract a foreign acquisition offer, the question of whether IP built on public Indian resources can move offshore has no legal answer yet. The Manus case shows what happens when that question goes unanswered until a deal is already on the table.

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