China Detains Founders of AI Startup Sold to Meta Amid Exit Restrictions

China Imposes Travel Restrictions on AI Startup Manus Co-Founders Amid Regulatory Review of Meta Acquisition

Chinese authorities have barred the co-founders of AI startup Manus from leaving the country as regulators review Meta's proposed acquisition of the company, in a move that underscores Beijing's tightening grip over artificial intelligence, cross-border tech deals, and the movement of talent.

According to reports, the restrictions were imposed after Meta agreed to buy Manus, an AI startup with Chinese roots that has since relocated key operations to Singapore. The Economic Times stated that Chinese officials have informed Manus co-founders Xiao Hong and Ji Yichao that they are not permitted to leave the country while the transaction undergoes regulatory review.

The move effectively places the founders under an informal travel ban, a tool Beijing has increasingly used in sensitive corporate, national security, or technology-related matters. While no formal charges have been filed, the restrictions highlight the growing concern of Chinese authorities over the movement of talent and data security in the wake of high-profile acquisitions.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Meta's Bet on Manus

Meta announced earlier this month that it would acquire Manus, an AI startup known for its work on large language models and autonomous agent systems. The acquisition is part of Meta's broader push to strengthen its generative AI capabilities and compete with rivals such as OpenAI, Google, and Anthropic. Manus has Chinese origins but shifted its corporate structure and headquarters to Singapore amid rising regulatory scrutiny in China.

The acquisition has placed the deal at the center of geopolitical and regulatory tensions between the US and China over data security, AI sovereignty, and talent migration. Beijing's growing concern over the "washing" of models, where Chinese-developed AI systems are rebranded or relocated overseas to avoid domestic controls and export restrictions, has also come under scrutiny.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

China's Growing Concern Over AI Regulations

Chinese regulators are examining whether Manus attempted to "wash" its models, a term used to describe Chinese-developed AI systems being rebranded or relocated overseas to avoid domestic controls and export restrictions. Authorities are particularly focused on whether core training, data pipelines, or engineering work continued to take place in China despite the company's Singapore base.

China has introduced sweeping AI regulations over the past two years, requiring security reviews, content controls, and approvals for model deployment and overseas partnerships. The country's tightening grip over artificial intelligence and cross-border tech deals underscores the challenges faced by foreign companies in the Chinese market.