China blocks S’pore AI company from buying Meta. It may hurt Beijing more than SG.

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In an unprecedented move, China blocked Meta’s acquisition of Manus, a Singaporean AI company.

The country argued that its technology was developed on Chinese soil and, therefore, falls under Beijing’s control, even if the business can no longer exist in China (and has never offered its services locally).

It is difficult to describe this as a direct “block”, however, since the work has been completed: all parties have received their payment, and the founders of Manus have officially joined the US company.

Beijing is successfully trying to reverse the deal that is happening abroad entirely and, in the process, is asserting power over sovereign nations.

Short term pain, long term gain for Singapore

Undoubtedly, this is not good news for Singapore, which has recently been seen as a good intermediary for Chinese companies seeking capital in more open foreign markets (especially the US). As Beijing tries to burn this bridge, many innovators may fall in line to avoid drawing Xi Jinping’s wrath.

This would make Singapore less attractive to traditional Chinese businesses, which have long regarded Hong Kong as a global base.

However, if history teaches us anything, it is that, over time, bureaucratic obstacles end up encouraging entrepreneurs to find ways around them.

In fact, even the founders of Manus seem to have anticipated these problems in advance and laid off all their staff, based in Wuhan and Beijing, and closed all offices, before moving to Singapore full-time in mid-2025.

The company has developed what it calls the first general AI agent, which can perform many different tasks you ask for (seeking information, creating websites, preparing documents, etc.), drawing the attention of Meta, which has already started to spread its algorithms on social media.

Manus’ creators made one mistake, however—they stayed in the country, barred from leaving Mar, pending the outcome of an official investigation into the deal.

Beijing has reportedly given the companies several weeks to restore Manus’ Chinese assets to their original state, including deleting any data or technology transferred to Meta. The authorities have also warned that fines may follow if the transaction is not completely stopped.

A common pattern of regulatory intervention

This is not the first time that Chinese regulators have moved toward what they see as excessive independence among prominent business figures.

The most famous tectonic rupture occurred in 2020, when Jack Ma’s Ant Group IPO was abruptly canceled a few days before China’s most famous tech innovator criticized financial regulators for stifling innovation.

Since then, Ma has disappeared from the media and lost his good fortune.

Although it looked like a victory for the ruling party, it chilled the entire private sector and was one of the reasons why entrepreneurs like those behind Manus AI are looking to find a way out of China.

However, with the economy showing signs of faltering in the post-COVID years, Xi Jinping himself had to try to mend relations with the private sector last year, hoping it could help boost domestic growth. He was even filmed shaking hands with Jack Ma.

However, the truth is that the damage of the past years cannot be easily repaired, and businesses need more than just symbolic gestures. The last-minute reduction in Manus’ discovery is an event similar (if not greater) in magnitude to Jack Ma’s banishment from the public arena.

It also shows local innovators that the ultimate owner of their intellectual property is the government, and that it can intervene even after they close their deals with foreign investors, putting them on hold. de facto under “house arrest.”

But local startups are constrained, as China’s capital market is not as deep as America’s, and that is a result of government policies.

To this end, domestic founders may want to use third parties such as Singapore to communicate with foreign investors. But now, they may just move abroad before any major work is done on Chinese soil. Otherwise, they risk losing the fruits of their labor (if not).

Interestingly, Singapore has an example of how to do that as well.

Shopee model

One of Singapore’s richest men—and the country’s most successful tech entrepreneur—Forrest Li, hails from Tianjin.

Educated in Shanghai and Stanford, he arrived in Singapore 20 years ago as a graduate with a mountain of student debt, sharing a rented room with his wife in an apartment in Braddell.

In 2009, he had founded Garena before launching Shopee in 2015, already as a Singaporean.

He is an example of how Chinese businessmen can be very successful even if they leave the country early in their lives to live in the culturally familiar Singapore. After all, on the e-commerce front, he beat Jack Ma himself, after Alibaba acquired Lazada, which was once the market leader in Southeast Asia, and competed with Shopee.

As a result of Beijing’s emphasis on foreign funding for Chinese startups, Singapore may soon see more talented Chinese engineers looking to try their luck far away from home.

Beijing’s effort to boost domestic innovation in critical areas like AI could backfire badly, as those with the best ideas may want to leave the country for the US or Singapore and build their products from the ground up.

Let’s remember that due to the conflicts between Beijing and Washington, Chinese AI companies are already facing restrictions on access to the most advanced semiconductor products, which will not suffer abroad.

What happened to Manus may encourage them to jump abroad much earlier than planned. And Singapore is there to catch them.

• Read other articles we’ve written about Singapore businesses here.

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