Oil prices may be back north of $111 as I write, threatening energy-importing Asia’s strong economic growth. But today we’re back considering an issue that predates the Trump 2.0 presidency: China’s efforts to exert its authority over Big Tech.

China is blocking the proposed $2 billion takeover by Meta Platforms  (META)  of the Chinese-founded Artificial Intelligence startup Manus, which designs AI agents. It demonstrates China’s ongoing efforts to control the tech sector, even beyond its own borders, and prevent Chinese-developed technology from leaving the country.

Manus Still Meta – For Now

Meta agreed to buy Manus (the Latin word for hand) for $2.5 billion in December, a deal outlined by my colleague Chris Versace, who does a great job explaining just why AI agents are important. For now, the Manus website still insists “Manus is now part of Meta – bringing Ai to businesses worldwide.”

But we learnt Monday that China’s National Development and Reform Commission is blocking the deal on national-security grounds, and requiring the two companies to revoke the transaction. Meta is reportedly moving to comply.

The ruling doesn’t mention Meta directly. But the commission states that it will “prohibit foreign investment in Manus,” and requires the “parties involved to withdraw the acquisition transaction.”

‘Singapore Washing’ Effort Fails

Although Manus moved its headquarters to Singapore in 2025, it was founded in Beijing in 2022 under parent company Butterfly Effect Technology. The “Singapore washing” via the move also intended to circumvent U.S. restrictions preventing U.S. investment into Chinese AI companies.

Those efforts have proved in vain. Days after Meta agreed to buy Manus, China’s commerce ministry launched an investigation into the sale. The two Manus co-founders, CEO Xiao Hong and chief scientist Ji Yichao, were summoned in March for a meeting in Beijing, and then prevented from leaving China during the regulatory review.

Undoing the deal will be complex. Meta must fully restore the Chinese assets of Manus to their original state, according to the ruling, including removing any data or tech transferred from Meta. It has already been integrating the Manus AI agent software into the Meta platform, and the Manus team of about 100 had already moved into Meta’s Singapore offices.

Manus Backers Likely to Comply?

What’s more, the venture-capital backers of Manus have already received their returns, according to The Wall Street Journal, but besides San Francisco-based Benchmark, their ranks include Chinese backers such as Shenzhen-based Tencent Holdings  (TCEHY)  (HK:0700), Hong Kong-based HSG (the former Sequoia Capital China), and Beijing-based ZhenFund. The Chinese venture-capital companies will surely cooperate with the Chinese government’s wishes, and reportedly plan to do so.

The U.S. Treasury had in May 2025 launched a review of Benchmark’s role in leading a $75 million funding round into Manus. As of January 2025, U.S. rules prohibit investment into sensitive tech such as AI, chips and quantum computing in “countries of concern,” chiefly China.

This pattern demonstrates the increasingly fraught arms race over the tech sector playing out as Washington seeks to limit the kind of tech China can acquire, and China reciprocates in kind by blocking the sale of Chinese technology abroad. If Manus had been buying part of Meta, I’m sure the U.S. authorities, principally the Committee on Foreign Investment in the United States (CIFIUS), would have blocked that deal, too.

The scrapping of the Manus-Meta deal comes as U.S. President Donald Trump prepares to visit Beijing on May 14-15, with a summit scheduled with Chinese counterpart Xi Jinping. While Trump has talked tough on China trade, he is also surely seeking to improve on the “Phase One” trade deal he secured during his first term.

That’s a deal that China largely failed to fulfill, in part due to the Covid-19 pandemic. Trump will be looking for a “win” on China trade, with further talks likely behind the scenes before Xi travels to the G20 meeting in Miami in December.

Concerns Date Back to 2021

The Chinese Communist Party clearly grew concerned that Chinese Big Tech companies held too much power, and risk selling it abroad if they list on Wall Street or sell out to international buyers.

It was the last-minute cancellation of the Alipay operator Ant Group’s world-record US$37 billion IPO in Hong Kong in November 2020 that marked the start of the Communist Party flex to assert its command over and above the tech sector. Already, China’s reach was stretching beyond borders into Hong Kong, nominally a Chinese territory with its own autonomy and market structure.

Those efforts reached Wall Street by June 2021, when the Chinese ride-hailing company Didi Global raised $4.4 billion with a listing in New York. Three days later, the Cyberspace Administration of China launched an investigation into Didi and barred it from registering new customers, sending its shares plunging. By the end of the year, Didi had declared plans to delist.

China at the same time tightened its handling of “critical information-infrastructure operators,” requiring them to submit to a formal review before listing on overseas stock markets. The Beijing authorities had for years turned a blind eye to Chinese companies that form an offshore company, normally in the Cayman Islands, then sell shares in the Caymans company on an international exchange. But the harsh treatment of Didi showed they would tolerate that no more.

Panama Canal Complications

The CCP also launched anti-monopoly investigations into all the major Chinese Big Tech operators. Regulators called in representatives from 13 leading online companies, a Who’s Who of the Chinese Internet, to warn them to cut out anticompetitive behavior.

Shares in e-commerce platform Alibaba Group Holding  (BABA)  (HK:9988), rival platform JD.com  (JD)  (HK:9618), the Temu app operator PDD Holdings  (PDD) , WeChat app operator Tencent, food-delivery app Meituan (MPNGF) (HK:3690), smartphone maker Xiaomi XIACY (HK:1810), the Twitter-equivalent Weibo  (WB)  (HK:9898), and short-video app Bilibili (BILI) (HK:9626) all plunged as the tech sector came under concerted attack. Beijing ultimately levied hefty fines against all involved.

More recently, China criticized the Hong Kong company CK Hutchison (CKHUY) (HK:0001), run by the tycoon Li Ka-shing, for its $23 billion deal to sell its ports operations to a consortium led by U.S. asset manager BlackRock  (BLK) . The 2025 sale was precipitated by Trump’s insistence that “China” was controlling the Panama Canal.

The Hutchison-BlackRock ports deal stalled under Beijing’s watchful eye. The Chinese companies COSCO Shipping Ports (CSPKY) (HK:1199) and China Merchants Port Holdings (CMHHY) (HK:0144) are now involved in talks to join the BlackRock deal. Any deal is further complicated by Panama’s decision to void the contract with Hutchison, with Hutchison seeking more than $2 billion in damages at arbitration.

Meta shares are down 0.6% in early trade Tuesday and won’t likely move significantly in response to the cancelled Manus transaction. But it is a setback for Meta’s AI ambitions to have to undo its integration of the Manus AI agent.

It’s clear for investors that any U.S.-China cross-border deal will likely be caught in a Beijing-Washington crossfire. So watch out for political interference in any deal that sees tech transfer across national lines.

Related: Should You Hold Google and Other Mag 7 Stocks Into Earnings News?

At the time of publication, McMillan was long Alibaba.