Prabowo Widodo
The United States and China are locked in an all-out race to build the most powerful artificial intelligence on the planet, a high-stakes competition now dramatically underscored by Beijing’s unprecedented detention of the co-founders of Manus, a Chinese-origin AI startup recently acquired by Meta. This latest development signals a significant escalation in China’s assertive stance against what it terms "selling young crops"—homegrown tech companies that pivot abroad and sell to foreign entities, taking their intellectual property and talent with them. The move sends a chilling message to innovators and investors alike, highlighting the profound geopolitical tensions interwoven with the future of global AI development.
The Manus Saga: From Beijing to Singapore and Beyond
Manus, an AI startup that quickly became one of China’s most buzzed-about tech ventures, burst onto the scene in the spring of last year with a groundbreaking demo video. The video showcased an AI agent capable of sophisticated tasks, including screening job candidates, meticulously planning vacations, and conducting detailed analysis of stock portfolios. The company audaciously claimed its AI agent outperformed OpenAI’s Deep Research, a bold assertion that immediately captured the attention of the global tech community. Within weeks, Benchmark, a quintessential Silicon Valley venture firm known for its early investments in tech giants, led a $75 million funding round that valued Manus at a staggering $500 million. This initial investment from a prominent American firm sparked immediate controversy in Washington. Senator John Cornyn, a vocal critic of US-China tech ties, publicly questioned the wisdom of such investments, tweeting at the time, "Who thinks it is a good idea for American investors to subsidize our biggest adversary in AI, only to have the CCP use that technology to challenge us economically and militarily? Not me."
Despite the nascent political headwinds, Manus’s growth trajectory remained meteoric. By December of the same year, the company had amassed millions of users and was generating over $100 million in annual recurring revenue. This rapid success caught the eye of Meta Platforms, Inc., whose CEO, Mark Zuckerberg, has famously staked the company’s future on AI innovation. Meta moved swiftly, acquiring Manus for an impressive $2 billion, a deal that sent ripples through both the tech and geopolitical landscapes.
Crucially, Manus had not merely sold itself to an American buyer; the company had spent the better part of the preceding year actively attempting to operate outside China’s increasingly restrictive technological orbit. This strategic shift involved relocating its headquarters and core team from Beijing to Singapore, a neutral and tech-friendly hub known for its stable regulatory environment and access to global talent. Furthermore, Manus underwent a significant restructuring of its ownership. Following the Meta deal announcement, Meta publicly pledged to sever all ties with Manus’s Chinese investors and completely shut down its remaining operations in China. By every measure, Manus was making a concerted effort to transform itself into a Singaporean company, ostensibly to navigate the complex geopolitical landscape and ensure its long-term viability.
A Geopolitical Chessboard: The US-China AI Race
The saga of Manus is inextricably linked to the broader, intense rivalry between the United States and China for technological supremacy, particularly in artificial intelligence. Both nations view AI as a critical component of future economic power, national security, and global influence. The competition spans multiple fronts: raw computing power, advanced chip manufacturing, data acquisition and processing, and, perhaps most critically, human talent.
China has been pouring billions into its homegrown AI models, fostering a robust ecosystem of startups and research institutions through state-backed funds and national strategic initiatives. Beijing’s "New Generation Artificial Intelligence Development Plan," unveiled in 2017, outlined ambitious goals to make China the world leader in AI by 2030, with specific targets for R&D spending, talent development, and industrial application. However, despite these massive investments, China faces significant challenges, particularly in retaining its top AI talent. A Carnegie Endowment study published late last year revealed a stark reality: 87 of the 100 top Chinese AI researchers at U.S. institutions in 2019 remained there, indicating a persistent "brain drain" towards American companies and research centers, which often offer unparalleled resources, academic freedom, and opportunities for cutting-edge work. This talent migration is a source of profound concern for Beijing, as it directly impacts its ability to achieve AI leadership. The U.S., for its part, has responded with initiatives like the CHIPS and Science Act, funneling billions into domestic semiconductor manufacturing and AI research, while simultaneously imposing export controls on advanced AI chips and related technologies to slow China’s progress.
Beijing’s Fury: The "Selling Young Crops" Doctrine
While Washington watched the Manus acquisition with a mix of concern and, in some quarters, vindication that a Chinese company was choosing a US buyer, the reaction in Beijing was, predictably, apoplectic. China has a specific, highly charged phrase for situations like Manus’s: "selling young crops" (卖青苗, mài qīng miáo). This term refers to homegrown technological companies, often nurtured with significant domestic investment and policy support, that move their operations abroad and sell themselves to foreign buyers before they have fully matured, thereby transferring valuable intellectual property, advanced technology, and crucial talent out of China’s direct control.
For Beijing, "selling young crops" is not merely an economic transaction but a national security issue and a betrayal of national interests. It undermines China’s strategic goals for technological self-reliance and global leadership. The Chinese Communist Party (CCP) has spent years meticulously establishing and enforcing the principle that no company, regardless of its perceived independence or global reach, operates outside its ultimate influence. The cautionary tale of Jack Ma, founder of Alibaba and Ant Group, serves as a stark reminder of Beijing’s resolve. In October 2020, Ma delivered a speech mildly criticizing Chinese financial regulators. The immediate aftermath was brutal: he disappeared from public life for months, Ant Group’s highly anticipated blockbuster IPO was abruptly killed overnight, and Alibaba was hit with a record $2.8 billion antitrust fine. China then proceeded to spend the next two years systematically dismantling its own booming tech sector, wiping out hundreds of billions in market value and reasserting state control over private enterprise. This episode demonstrated that Chinese leaders are many things, but subtle in their exercise of power is not one of them.
Regulatory Crackdown: The NDRC’s Intervention
Against this backdrop of intense geopolitical competition and Beijing’s demonstrated willingness to exert control, the recent actions against Manus’s founders come as a powerful, albeit not entirely surprising, development. On Tuesday, the Financial Times reported that Manus co-founders Xiao Hong and Ji Yichao were summoned to a meeting this month with China’s National Development and Reform Commission (NDRC). The NDRC, China’s macroeconomic planning agency, wields immense power over economic policy, foreign investment, and industrial development. During this meeting, Hong and Yichao were reportedly informed that they would not be permitted to leave the country for an unspecified period.
While no formal charges have been filed, the NDRC has initiated an "inquiry" into whether the Meta deal violated Beijing’s foreign investment rules. Beijing is officially calling this a "routine regulatory review," a phrase that often masks deeper political motivations and strategic objectives. However, the travel ban, imposed without formal legal process or public explanation beyond the vague "inquiry," is a de facto detention and a clear message. It underscores the broad, often opaque powers of Chinese regulatory bodies and their willingness to use them against individuals and companies perceived as acting against national interests. This move effectively holds the founders hostage, putting immense pressure on Meta and potentially setting a dangerous precedent for any foreign entity acquiring Chinese-origin technology.
Reactions and Broader Implications
The detention of Manus’s founders has triggered a wave of reactions and raised profound questions about the future of cross-border tech investment and the global AI landscape.
In Washington, the development is likely to be viewed as further proof of China’s authoritarian tendencies and its aggressive tactics in the tech race. Senator Cornyn, whose earlier concerns were amplified, would likely reiterate warnings about the risks of engaging with Chinese tech. Other US policymakers, particularly those advocating for stricter controls on technology transfer, could leverage this incident to push for more robust screening mechanisms for foreign investments and acquisitions involving companies with any Chinese ties, however tenuous. The U.S. Commerce Department and Treasury Department may issue advisories to American companies regarding the increased risks of engaging with entities that originate in China, even if they have attempted to internationalize.
Meta, while having pledged to cut all ties with Manus’s Chinese investors and operations, now finds itself in a precarious position. The company has yet to issue a detailed statement beyond reiterating its commitment to a fully Singaporean Manus. However, the detention of the founders complicates the integration process, creates reputational risks, and could lead to demands for greater transparency regarding due diligence processes for future acquisitions. Analysts suggest Meta’s legal and public relations teams are likely working overtime to navigate this unprecedented situation, balancing their commitment to the acquired company with the need to avoid further geopolitical entanglement.
Industry watchers and venture capitalists are expressing deep concern. The incident is expected to have a significant "chill effect" on cross-border mergers and acquisitions involving Chinese-origin tech companies, even those that have genuinely attempted to distance themselves from Beijing. Investors will face intensified scrutiny and perceived risks, potentially leading to a more bifurcated global tech market where capital flows and talent mobility are increasingly constrained by national allegiances. Startups in China, already struggling with a tightened regulatory environment and economic slowdown, may find it even harder to attract foreign capital or seek international exits, further consolidating Beijing’s control over its domestic tech champions.
For the Manus founders, Xiao Hong and Ji Yichao, the personal stakes are immense. Their liberty is curtailed, and their professional futures are now inextricably linked to the outcome of this "routine regulatory review," which could drag on indefinitely. Their experience serves as a stark warning to other Chinese entrepreneurs aspiring to go global.
Ultimately, the detention of Manus’s founders is more than just a regulatory dispute; it is a powerful geopolitical maneuver. Beijing is asserting its sovereign right to control its technological assets and talent, even when those assets attempt to move abroad. It underscores the reality that in the fierce US-China AI race, the lines between economic competition, national security, and state control are increasingly blurred. While someone at Manus might have once believed they had successfully navigated the complexities of operating outside China’s orbit, Beijing has now made it clear that the stakes of the AI race are too high for such gambles. The world watches as Beijing demands answers, and Manus’s founders, for now, are going nowhere until those answers are delivered. This incident will undoubtedly reshape strategies for venture capital, M&A, and talent management in the global technology sector for years to come.
