'Draconian development' in Meta-Manus deal draws the line in China's AI race with the U.S.

Manus was hailed by Chinese state media as the "next DeepSeek" soon after its launch in March 2025, months before the startup relocated to Singapore. Cheng Xin | News | BEIJING — China's decision to block U.S. tech giant Meta 's $2 billion acquisition of artificial intelligence startup Manus is being seen by analysts as a warning to tech entrepreneurs. "Clearly after Manusgate, founders will know that if you start in China, you stay in China," said Duncan Clark, an early advisor to Alibaba and chairman of consultancy firm BDA China. "We know the deal was already in trouble," he said, "but this draconian development is on the more extreme side of the likely outcomes." The timing is notable as it comes just days before Meta's scheduled earnings release Wednesday local time, and less than a month before a planned visit by U.S. President Donald Trump to Beijing, during which trade and investment are expected to be discussed. The case also has direct implications for how businesses and investors position themselves in the U.S.-China tech race, as they navigate new risks around data, talent and intellectual property. For Chinese AI startups and U.S. investors, "the takeaway is that Singapore incorporation alone does not de-risk a deal from Chinese regulatory reach," said Chris Pereira, president and CEO of consulting firm iMpact. "The broader implication," he said, "is that a new front in the competition between the U.S. …