China prohibits foreign investment in the Manus AI project as examination of AI exports increases.

      Credit: Manus

      Today, China’s National Development and Reform Commission (NDRC) announced that, in alignment with its laws and regulations, it has decided to prohibit foreign investment aimed at acquiring the general-purpose AI project Manus. Additionally, it has mandated that the involved parties promptly withdraw and cancel all related acquisition activities.

      This decision represents a significant move in China’s regulation of foreign mergers and acquisitions within the tech sector, underscoring its commitment to uphold national technological sovereignty and data security.

      The Manus project was initiated in March 2025 by the Chinese team Monica.im (Beijing Butterfly Effect Technology) and is referred to by its developers as a general-purpose AI agent. Its main ability is to autonomously handle complex computer-based tasks within a virtual environment, encompassing activities such as market research, code review, and event planning, while also supporting comprehensive output delivery.

      However, the cross-border transfer of this technological development has attracted considerable regulatory scrutiny. Investigations indicate that Manus’ core technologies were created in China and involve processing a large volume of user data. Although its parent company has relocated its registered headquarters to Singapore, its affiliated entities in China—Beijing Red Butterfly Technology and Beijing Butterfly Effect Technology—are still operational. The technical foundation and domestic entities have not been legally dissociated.

      Credit: Manus

      As per China’s Measures for the Security Review of Foreign Investment, the Catalogue of Technologies Prohibited and Restricted from Export in China, and the Measures for Security Assessment of Data Export, core AI algorithms are classified as restricted export technologies. Thus, cross-border transfers necessitate adherence to technology export licensing protocols and data security evaluation standards.

      In a related case concerning Meta's acquisition, the involved parties reportedly neglected to comply with the mandatory procedures for declaring technology export and data outbound transfers, and may have attempted to bypass regulatory oversight through structural modifications, leading to the activation of the national security review mechanism.

      The Ministry of Commerce has reiterated that companies involved in cross-border activities must adhere to Chinese laws and regulations and complete all necessary statutory procedures. The recent prohibition reflects a stringent commitment to these compliance requirements.

      This incident serves as a warning to the AI sector and highlights China’s strategic approach to balancing technological innovation with national security in a global context. As major economies worldwide enhance regulatory scrutiny over cross-border investments in high-tech industries, China is establishing a framework to safeguard its technological sovereignty via stricter regulations and improved oversight.

      Looking ahead, technology firms expanding internationally will need to prioritize compliance, balancing business interests with national obligations to ensure stable and sustainable development in global competition.

      Jessie Wu is a tech reporter based in Shanghai. She reports on consumer electronics, semiconductors, and the gaming industry for TechNode. Connect with her via e-mail: jessie.wu@technode.com.