Last week, China’s top economic planning body ordered Meta to terminate its acquisition of AI startup Manus, valued at approximately $2 billion. The decision has sent shockwaves through the Chinese tech industry and accelerated a massive regulatory crackdown on the offshore corporate structures used by the country's most promising artificial intelligence firms.

Beijing Blocks a Closed Deal 

On April 28, the National Development and Reform Commission issued a brief directive prohibiting foreign investment in Manus and ordering the parties to void the deal. The decision followed months of scrutiny, during which the startup’s two co-founders were banned from leaving China while regulators assessed whether the transaction violated investment and technology export rules.

Meta stated that the deal "fully complied with existing laws" and expressed hope for a "proper resolution of the matter." However, the practical difficulties of unwinding the deal are significant: Manus employees have already integrated into Meta's AI development team, and investors, including HongShan Capital, have already received payouts, according to Fortune, citing Bloomberg reports.

Founded in 2022, Manus moved its headquarters from China to Singapore around mid-2025—well before Meta announced the acquisition in December. The company gained attention for its autonomous AI agent technology. However, its Chinese origins remained an indelible part of its history: Beijing intervened despite the geographical restructuring, sending a clear message that a simple change of jurisdiction will not exempt startups from regulatory oversight.

"Red Chip" Structures Under Pressure 

The Manus case has triggered a shift in how China’s securities regulator approaches companies structured through offshore holding entities. The China Securities Regulatory Commission has begun tightening approvals for Hong Kong IPOs for so-called "red chip" companies—Chinese enterprises incorporated in the Cayman Islands or British Virgin Islands that hold assets in mainland China.

According to a report by The Information, several AI companies planning Hong Kong listings are now considering liquidating their overseas structures. Moonshot AI, developer of the Kimi model series, is in talks with lawyers regarding restructuring but has not yet reached a final decision. Autonomous driving firm DeepRoute.ai is conducting a similar assessment, while another startup, Jiepao Star, has already begun winding down its offshore assets. Industry advisors estimate that this process typically takes six to twelve months and involves share buybacks, the creation of domestic joint ventures, and the settlement of capital gains tax obligations.