China to lift travel ban on Manus AI founders as Meta deal unwinds

Meta Platforms ↘ 0.86% is completing the full unwinding of its roughly $2 billion acquisition of Manus, the Chinese-founded AI agent startup, after China's National Development and Reform Commission blocked the deal on national security grounds in April. Manus announced on Tuesday that it will resume operating as an independent company, and CEO Xiao Hong is preparing to return to Singapore as Beijing moves to lift the travel ban that has kept him in China for nearly five months.vespernews+2

A Deal That Couldn't Survive Beijing's Reach

Meta acquired Manus in late December 2025, paying what the Wall Street Journal reported as $2.5 billion for the Singapore-based company that builds AI agents capable of autonomously browsing the web, writing code, and completing complex tasks. The startup had been founded in China in 2022 under the name Butterfly Effect before relocating to Singapore in mid-2025, a move that gave it access to Western AI models and chips while distancing it from Chinese regulatory oversight.thestar+1

The restructuring did not shield the deal. In March, co-founders Xiao Hong and Ji Yichao were summoned to Beijing and barred from leaving the country while the NDRC reviewed whether the sale violated foreign investment rules. On April 27, the NDRC formally ordered Meta to unwind the transaction, the first publicly blocked AI acquisition under China's security review regime.wsj+3

Operational Separation and What Comes Next

By June, Meta had erected a firewall between itself and Manus, cutting the startup's staff off from internal data systems and barring its own employees from using Manus tools. In a note to users this week, Manus said it would delete data generated by "certain users" on or after December 29 to comply with regulatory requirements, asking affected users to back up their data by August 23.techcrunch+2

The Financial Times reported Friday that China is poised to lift the travel restrictions on Manus's founders, with Xiao Hong informing employees he plans to return to Singapore shortly. Tencent Holdings is separately in talks to become Manus's largest external shareholder at the same $2 billion valuation, alongside original investors ZhenFund and HSG, according to Reuters.gate+3

A Warning for Cross-Border AI Deals

The episode establishes a precedent that offshore incorporation does not shield Chinese-origin technology from Beijing's authority. Where talent and intellectual property originated in China, regulators have shown they will intervene regardless of where the corporate shell resides. Both Washington and Beijing have now demonstrated willingness to override commercial transactions when AI capability is at stake — the United States through export controls and investment restrictions, China through forced divestitures. For American acquirers evaluating Chinese-founded AI companies structured through Singapore or Delaware, the Manus case introduces a regulatory risk that few had priced in.wionews