The long-awaited decision on Meta's acquisition of Manus AI finally landed on Monday. China's Office of the Working Mechanism for Security Review of Foreign Investment, operating under the National Development and Reform Commission,the country's top economic planner, formally prohibited the foreign takeover of Manus in accordance with laws and regulations, ordering the parties to unwind the transaction.

This deal – touching on geopolitics, critical technology, data security and complex capital restructuring – triggered a foreign investment security review. Such a step is uncommon but highly significant. So, what signal does the Manus ban send? And what exactly is being prohibited?

Stopping 'clean break' offshoring

First, what is being banned is the non-compliant practice of companies "shedding their Chinese identity just before heading offshore."

In March 2025, the Chinese startup Butterfly Effect launched Manus, an AI agent that became an overnight sensation. Yet by June of the same year, Manus had relocated its headquarters to Singapore, slashed its China-based team and completely ceased all services and operations within China.

Then, in December 2025, Meta announced a splashy deal to acquire Manus for around $2 billion. The move sparked controversy: a company built with Chinese engineers and nurtured in China's tech ecosystem was suddenly cutting its China ties after securing American investment.

Lawyers told China Media Group that the Manus deal involved moving AI business assets out of China and selling them to an overseas buyer, US social media giant Meta. Under China's Measures for the Security Review of Foreign Investment, "even if the earlier outbound restructuring took place between related entities controlled by the founder, the subsequent transaction still falls within the scope of foreign investment security review," one of the lawyers said.

While Manus shifted its headquarters to Singapore, its core business remained in China at the time. The company then progressively transferred key personnel, technology and other critical assets overseas, while the onshore Manus entity was gradually hollowed out – stripped of the core business and left with only a skeleton operation managing non-core activities.

In effect, the entire sequence of moves achieved an overall transfer of the Manus' core business out of China, triggering a review of possible cross-border investment deals that try to sidestep regulatory scrutiny.

Open doors, secured borders

Second, what is being blocked are the security risks that accompany opening-up – and this is not about closing the door.

The fundamental purpose of China's foreign investment security review system is to balance openness with national security. This is standard practice in many countries around the world.

To ensure the system has real teeth, security review systems commonly adopt a "substance over form" approach – looking through corporate structures – and reserve the right to intervene proactively when necessary. China's system is no different.

In the Manus case, the company's early R&D was largely done in China, and its technical team consisted of Chinese engineers. These defining features mean that the movement of its people, technology and data unavoidably intersects with Chinese national interests.

Under the foreign investment security review rules, investment activities involving such technologies are legally required to undergo security review.

China has written expanding high-standard opening up and creating a new paradigm of win-win cooperation into the 15th Five-Year Plan (2026-2030). Regulation by law is not an obstacle to opening up – it is a necessary condition for orderly opening-up. It does not contradict the policy of encouraging foreign investment in China.

Development and security need to be in dynamic balance, each reinforcing the other. The more a country opens up, the more attention it must pay to security. By drawing clear security boundaries, regulators give compliant foreign investors the reassurance they need to plan for the long term. That, in itself, is a hallmark of genuine high-level opening up.