A recent official ban from China has captured global attention within the AI industry. The Office of the Inter-Ministerial Joint Conference for the Security Review of Foreign Investment, operating under the National Development and Reform Commission, has taken action in accordance with the law, explicitly prohibiting the foreign acquisition of the Manus project and demanding the parties involved rescind the acquisition deal.

Significantly, this marks the first public decision since the implementation of the "Measures for the Security Review of Foreign Investment" in 2021 to prohibit an investment and require the revocation of a transaction, making it a landmark event. What signal does this send?

First, it is important to understand the background of Manus. It was originally an AI agent launched by the Chinese company Butterfly Effect in March 2025, which gained immense popularity immediately upon release and was dubbed the "fully automated AI worker." The early team, data, and research and development for Manus were primarily based in China. It can be said that without China, Manus would not exist as it does today.

However, after its rapid rise, the situation changed dramatically. In June 2025, Manus abruptly relocated its headquarters to Singapore, carried out large-scale layoffs of its domestic team, and ceased all services and operations within China. More surprisingly, in December of the same year, the US tech giant Meta announced its intention to acquire this newly "relocated" company for approximately $2 billion.

This series of actions made it clear to observers: the entity was nurtured and grew within China, then severed its Chinese elements to "wash" its identity overseas, aiming for a high-price sale to foreign capital while attempting to bypass Chinese regulatory scrutiny. This behavior crosses the red line of national security and industrial security, and regulatory authorities naturally could not stand by idly.

Therefore, this intervention is intended to firmly block the misguided path of "wash-out overseas listings." Zhu Keli, founding dean of the New Economic Research Institute and chief expert on the intelligent economy, explained that the essence of a "wash-out overseas listing" is when some enterprises rely on domestic technology, talent, and data resources to cultivate core achievements, and then use methods such as re-domiciling,剥离本土业务, and changing entities to evade regulatory scrutiny and transfer core technology and assets to foreign capital, thereby damaging national industrial security and the foundation of innovation.

Clearly, this opportunistic approach is not viable. Many are concerned whether this signifies a blanket ban on AI firms going global. Researcher Zhu Youping from the National Information Center clarified that this "look-through" regulation is not about prohibiting overseas expansion, but about prohibiting the evasion of supervision. Article 4 of the "Measures for the Security Review of Foreign Investment" explicitly includes important information technologies, internet products and services, and key technologies within the scope of review. The acquisition by Meta would grant it 100% control, a scenario requiring proactive declaration, yet neither Meta nor Manus fulfilled this obligation.

Zhu Youping stated that regulators employ a look-through review, focusing on the origin of the technology, the source of data, and the affiliation of talent, rather than merely the company's place of registration. Although Manus moved its headquarters to Singapore, its core technology, training data, and R&D team all originated in China, constituting an attempt to "incubate using domestic resources and monetize through an overseas structure" to evade regulation. The regulatory action sends a clear signal that any attempt to circumvent supervision through structural design is invalid, and compliance is the lifeline for enterprises.

In fact, China has never closed the door to compliant overseas expansion for AI companies. After all, globalization is an irreversible trend, and for China's AI industry to grow stronger and larger, it requires participation in international market competition and cooperation. However, supporting compliant global expansion does not equate to condoning "wash-out overseas listings." Through this ban, China has drawn a red line, sending a clear signal to the global market.

The key issue underlying this is technological sovereignty; core technologies cannot be "washed" and transferred abroad. AI is a core arena in global technological competition, relating to national strategic security and the future of industries. Core AI technologies that rely on Chinese resources and are incubated and developed within China cannot simply be transformed into foreign assets through a superficial "shell change."

Zhu Youping believes that since Manus's core algorithms and models were entirely developed by a Chinese team, once controlled by Meta, it could lead to an irreversible outflow of key technology. The training data contains a vast amount of Chinese user information and market data, posing risks of data leakage and misuse. The integration of the core R&D team into Meta could result in a drain of China's AI talent resources. This reflects China's stance on protecting key core technologies, avoiding a scenario where it cultivates capabilities only for the benefit of others in the AI race.

Zhu Keli indicated that this move aims to standardize the order of cross-border investment, guide enterprises to adhere to compliance as a bottom line, and promote a compliant and sustainable path for the global expansion of key sectors like AI. This safeguards the bottom line of industrial security while also ensuring a healthy ecosystem for open innovation, allowing opening-up to progress steadily on a safe and controllable track.

For Chinese AI companies, this incident serves as a profound warning: there are no shortcuts in going global, and speculation has no future. Instead of scheming about how to "wash" for arbitrage, it is better to focus diligently on technological innovation and strictly adhere to compliance standards. Only then can companies operate stably and go the distance.