Beijing's anxieties that it would lose important technology to the United States in an escalating tech war are reflected in its move to reject Meta's $2 billion acquisition of Chinese-founded artificial intelligence startup Manus.
Following Beijing's investigation into the transaction earlier this year, the nation's state planner issued a brief statement on Monday urging the two parties to cancel the agreement.
The action was taken just weeks before US President Donald Trump's highly anticipated summit with Chinese leader Xi Jinping in Beijing, and it is predicted to have a chilling impact on China's AI startup scene. It is anticipated that the two will resolve disagreements on a number of important topics, including trade and technology regulations.

Beijing's move highlights the increasingly difficult climate for cross-border investments in vital industries like semiconductors and artificial intelligence, and it further solidifies the division of global technology development as US-China tensions rise.
But in reality, it will be difficult to unwind the contract. Executives from the firm joined the US IT behemoth shortly after Meta announced the acquisition in late December and integrated Manus into its internal systems.
As the competition for the technology intensifies with competitors like Google and OpenAI, Meta may have lost out on a chance to bolster its AI capabilities due to the prohibited acquisition.A representative for Meta told CNN that the deal "complied fully with applicable law" in response to Beijing's ruling.
The individual said, "We anticipate an appropriate resolution to the inquiry," but they did not go into detail about how the business hopes to work out a deal with Beijing.
Manus has been contacted by CNN for comment.
Founded in China, Manus caused a stir in the industry when it introduced its AI agent in March of last year. An AI agent is a system that can operate independently on behalf of a user. The emergence of a domestic agentic AI startup with exceptional performance was a source of pride for many in China.However, after the firm moved its headquarters and most of its activities to Singapore, and even more so after it revealed that it had been acquired by Meta, public opinion deteriorated.
Some on Chinese social media condemned the deal as "treacherous" and charged the business with "selling out" to the US, which has placed extensive export restrictions on China in an effort to impede its advancement in cutting-edge technology like artificial intelligence.
Beijing initiated an investigation into the transaction in January in an exceptionally quick move to deter other Chinese internet businesses from using a similar approach. It's yet unclear if officials will make any announcements regarding the investigation's next steps.However, experts have previously cautioned that a harsh reaction from Beijing, like cancelling the agreement, might discourage entrepreneurs with international aspirations and encourage talent to launch companies elsewhere right away.
The Financial Times revealed last month that Beijing had prohibited Xiao Hong and Ji Yichao, two of Manus's co-founders, from leaving the nation while it conducted an inquiry.