China has ordered Meta to unwind its acquisition of Manus, a Singapore-based AI company with Chinese founders. The National Development and Reform Commission announced Monday it would prohibit foreign investment in the startup and require the deal to be reversed. The ruling could send a chilling signal to Chinese tech founders considering partnerships with foreign companies.

Officials had been investigating whether Meta's December acquisition violated China's rules on foreign investment and technology export requirements. The timing is notable—the decision came just weeks before a planned meeting between President Trump and China's leader Xi Jinping. Meta has described the two teams as already "deeply integrated," raising questions about how the unwind would work in practice.

The case underscores escalating tensions in US-China tech relations. Chinese authorities had previously restricted Manus executives from departing China, attempting to discourage AI businesses from moving offshore. The ruling signals a broader crackdown that could make it harder for other Chinese firms to attract foreign investment and deter researchers from registering companies outside China to bypass regulations.