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The Chinese government is blocking Meta's $2 billion acquisition of the autonomous AI agent startup Manus.
China's move to block the Meta-Manus deal indicates a policy of aggressively securing key technologies and preventing their transfer overseas, similar to U.S. policy.
Investors and entrepreneurs believe that the strategy of "Singapore washing," where Chinese startups relocate to Singapore to access international markets and capital, is no longer viable following China's intervention in the Manus deal.
The debut of Chinese chatbot DeepSeq in January of the previous year caused a market shock that wiped almost a trillion dollars off the valuations of U.S. tech stocks.
Two of Manus's founders have reportedly been asked to return to mainland China and are currently there.
China is asserting legal jurisdiction over Manus, a company headquartered in Singapore, on the grounds that it is a Chinese company.
Current U.S. regulations, known as "reverse CFIUS," prohibit U.S. entities like pension funds from investing in Chinese companies involved in advanced AI and advanced semiconductors.
The parallel fund structure for investing in China prevents U.S. investors from backing potentially dominant AI companies, limiting them to general China growth exposure.
In 2020, the Chinese government blocked the IPO of Ant Group.
In 2021, the Chinese government forced Didi to delist from the New York Stock Exchange.
China's intervention against Ant Group was motivated by financial stability concerns, whereas its intervention against Manus is primarily driven by geopolitical conflict with the U.S.
The technology gap in AI between the U.S. and China is estimated to be between a few months and two years.