Okay, so the U.S. and China are locked in an all-out race to build the most powerful AI on the planet. Beijing is throwing billions at homegrown models, tightening its grip on the tech sector, and watching nervously as its best AI talent gravitates to U.S. companies. A Carnegie Endowment study published late last year found that 87 of the 100 top Chinese AI researchers at U.S. institutions in 2019 are still there.
Yet Manus — one of China’s most buzzed-about AI startups — quietly relocated to Singapore and sold itself to Meta for $2 billion. Did anyone think there would not be a reckoning over this tie-up?
As industry watchers know, Manus burst onto the scene in the spring of last year with a demo video showing an AI agent screening job candidates, planning vacations, and analyzing stock portfolios, and it cheekily claimed it outperformed OpenAI’s Deep Research. Within weeks, Benchmark — the consummate Silicon Valley venture firm — led a $75 million funding round at a $500 million valuation. That was surprising. (Senator John Cornyn had thoughts, tweeting at the time, “Who thinks it is a good idea for American investors to subsidize our biggest adversary in AI, only to have the CCP use that technology to challenge us economically and militarily? Not me.”)
By December, Manus had millions of users and was pulling in over $100 million in annual recurring revenue. Then Meta came calling, and Mark Zuckerberg, who has staked the company’s future on AI, snapped it up for $2 billion.
It’s worth noting that Manus didn’t just sell itself to an American buyer; it spent the better part of last year actively trying to operate outside China’s orbit. The company relocated its headquarters and core team from Beijing to Singapore, restructured its ownership, and after the Meta deal was announced, Meta pledged to cut all ties with Manus’s Chinese investors and shut down its operations in China entirely. By every measure, Manus was trying to make itself a Singapore company.
But if that string of events raised eyebrows in Washington, you can only imagine that in Beijing, they were apoplectic.
China has a phrase for all of this: “selling young crops” — homegrown AI companies that move abroad and sell themselves to foreign buyers before they’ve fully matured, taking their intellectual property and talent with them.
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Beijing hates it and has spent years establishing that no company operates outside its reach. Surely, we all remember that time Jack Ma gave a speech in 2020, mildly criticizing Chinese regulators, after which he disappeared from public life for months, Ant Group’s blockbuster IPO was killed overnight, and Alibaba was handed a $2.8 billion fine. China then spent the next two years methodically dismantling its own booming tech sector, wiping out hundreds of billions in market value. Chinese leaders are many things, but subtle is not one of them.
Which is why it wasn’t entirely surprising when, on Tuesday, the Financial Times reported that Manus co-founders Xiao Hong and Ji Yichao were summoned to a meeting this month with China’s National Development and Reform Commission and told that they wouldn’t be leaving the country for a while. No formal charges have been filed — just an inquiry into whether the Meta deal violated Beijing’s foreign investment rules.
Beijing is calling it a routine regulatory review.
At some point, someone at Manus probably thought they’d gotten away with it, and maybe they still will. But given the stakes of the AI race, that was always a big gamble. Now Beijing wants answers; Manus’s founders are apparently not going anywhere until it gets them.
