China restricts foreign investment in the Manus AI project as increasing scrutiny on AI exports intensifies.

      Credit: Manus

      The National Development and Reform Commission (NDRC) of China announced today that it has made a decision, in accordance with existing laws and regulations, to prohibit foreign investment in the acquisition of the general-purpose AI agent project known as Manus. Furthermore, the involved parties are required to promptly withdraw and cancel all related acquisition activities.

      This decision is a significant milestone in China's regulation of foreign mergers and acquisitions within the technology sector, demonstrating the country’s strong commitment to protecting 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 characterized by its developer as a general-purpose AI agent. Its primary function is to autonomously carry out complex computer-based tasks within a virtual environment, covering various scenarios such as market research, code review, and event planning, while also facilitating end-to-end output delivery.

      However, the cross-border transfer of this technological advancement has garnered considerable regulatory scrutiny. Investigations reveal that Manus' core technologies were developed in China and involve processing large volumes of user data. Although the parent company has relocated its registered headquarters to Singapore, its affiliated entities in China—Beijing Red Butterfly Technology and Beijing Butterfly Effect Technology—continue to operate. The technical origins and domestic entities remain legally intertwined.

      Credit: Manus

      According to 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, fundamental AI algorithms are classified as restricted export technologies. Consequently, cross-border transfers necessitate adherence to technology export licensing and data security assessment protocols.

      In the case involving Meta's acquisition, the parties reportedly did not comply with the legally mandated procedures for technology export and data transfer declarations, and might have sought to evade regulatory oversight through structural changes, thereby activating the national security review mechanism.

      The Ministry of Commerce has previously emphasized that companies engaged in cross-border activities must adhere to Chinese laws and regulations and complete all required procedures. This recent prohibition decision underscores a stringent commitment to these compliance standards.

      This case serves as a cautionary example for the AI sector and illustrates China's strategic approach to balancing technological innovation with national security in a globalized environment. As major world economies enhance regulatory oversight over cross-border investments in high-tech industries, China is establishing a framework to safeguard technological sovereignty through strengthened regulations and increased supervision.

      Moving forward, technology firms looking to expand internationally will need to prioritize compliance, striking a balance between business interests and national responsibilities to ensure consistent and sustainable growth in global competition.

      Jessie Wu is a technology reporter based in Shanghai, covering consumer electronics, semiconductors, and the gaming industry for TechNode. She can be reached via e-mail at jessie.wu@technode.com. More from Jessie Wu.