The End of ‘Singapore-Washing’? China Reasserts Control Over AI Firms Abroad

China’s decision to block U.S. tech giant Meta’s $2 billion acquisition of Singapore-based artificial intelligence startup Manus has intens...

China’s decision to block U.S. tech giant Meta’s $2 billion acquisition of Singapore-based artificial intelligence startup Manus has intensified scrutiny of “Singapore-washing,” a strategy in which Chinese-founded companies relocate headquarters or operations to the city-state to ease access to global markets and capital while distancing themselves from Beijing.
The move, announced on April 28, 2026, by China’s National Development and Reform Commission (中华人民共和国国家发展和改革委员会), marks a significant escalation in Beijing’s efforts to retain control over critical AI technologies and talent amid deepening U.S.-China technological rivalry. It signals that corporate restructuring alone may no longer shield such firms from regulatory oversight tied to their origins.
Manus, an AI agent startup specializing in autonomous systems capable of executing complex tasks with minimal human input, originated from Beijing-based Butterfly Effect Technology. Launched in March 2025 and hailed by Chinese state media as “the next DeepSeek,” the company relocated its headquarters and core operations to Singapore later that year. Meta announced the acquisition in December 2025, describing it as a way to enhance advanced AI features.
Chinese authorities initiated a national security review shortly after the deal’s announcement, citing concerns over technology exports and potential harm to industrial security. Reports indicated that two Manus co-founders, Xiao Hong and Ji Yichao, were barred from leaving China during the probe. Beijing has now demanded that involved parties withdraw from the transaction.
Meta stated that the transaction complied fully with applicable laws and anticipated an appropriate resolution. The company has already integrated more than 100 Manus employees into its Singapore office. Analysts note that unwinding the deal could prove complex, particularly regarding data and intellectual property reversal.
The Manus case highlights the limits of “Singapore-washing,” a term used by observers to describe efforts by Chinese firms to reincorporate or shift key functions to Singapore. This approach aims to present companies as less overtly tied to China, facilitating listings, investments, and operations in Western markets while navigating export controls and national security reviews.

Examples of the Strategy

Fast-fashion retailer Shein, founded in Nanjing in 2008 by Chinese-American entrepreneur Chris Xu, relocated its headquarters to Singapore in 2021. The company sought U.S. and London listings but faced regulatory hurdles over labor practices and Chinese supply chain ties. In February 2026, Xu publicly reaffirmed Shein’s Chinese roots at a Guangdong government forum, highlighting support for over 600,000 jobs and pledging $1.5 billion in local investment as the firm pivots toward a Hong Kong IPO.
ByteDance, parent of TikTok, expanded its international operations through Singapore, investing billions and appointing Singaporean citizen Shou Zi Chew as TikTok CEO. Despite these steps, U.S. authorities continued to view TikTok as subject to Chinese influence, leading to a forced divestiture of its U.S. operations.
Other firms, including data center operator DayOne (spun off from GDS Holdings) and AI-related entities like ChemLex, have also established Singapore presences. Singapore offers advantages such as 28 free trade agreements, a trusted international brand, and lower U.S. tariffs of 10 percent on goods originating there.

Regulatory Pushback from Both Sides

Western regulators increasingly look beyond incorporation location to examine ownership, supply chains, data flows, and operational control. U.S. scrutiny has extended to entities in Singapore and Malaysia suspected of diverting restricted technologies, such as Nvidia chips, back to China.
Beijing, meanwhile, has signaled that technological nationality follows the origins of development, data, and talent rather than registration. The Manus review establishes a precedent that attempts to transfer sensitive AI assets abroad without approval will face resistance. Experts describe this as a turning point in the U.S.-China AI race, where talent and know-how are now central battlegrounds.
Analysts such as Duncan Clark of BDA China noted that founders starting in China should expect to remain under its regulatory ambit. Wendy Chang at the Mercator Institute for China Studies emphasized Beijing’s message to tech leaders that bypassing national regulations will not be tolerated.
The case has prompted Chinese AI founders and investors to reconsider strategies. Some now advocate starting companies outside China from inception to avoid mid-growth restructuring risks. Others explore genuine operational separation or listings in friendlier venues like Hong Kong.

Broader Context and Implications

The trend of relocation to Singapore accelerated during U.S.-China tensions, particularly under former President Donald Trump’s policies. Demand for relocation services has risen, with firms seeking neutrality and access to global talent and funding. However, high-profile failures have exposed vulnerabilities for larger entities.
Singapore finds itself on a geopolitical tightrope. While benefiting economically from hosting these firms, it risks pressure from both Washington and Beijing. The city-state may need to bolster regulatory frameworks for cross-border AI transactions to maintain its bridging role.
In the AI sector, where agentic systems like Manus rely on continuous data feedback loops and context engineering, regulators view core algorithms and talent as strategic assets with enduring national ties. China’s updated export control catalogues and “affiliates rule” extend oversight to subsidiaries and related entities.
The Manus episode occurs against a backdrop of intensified competition. The U.S. has restricted advanced chip exports to China, prompting Beijing to push for self-sufficiency through initiatives like DeepSeek. Breakthroughs by Chinese firms have drawn national pride but also heightened concerns over talent outflow.
Experts predict that the strategy of using Singapore as a launch pad rather than an exit ramp may persist for smaller or less sensitive operations. However, for frontier AI technologies with deep Chinese roots, full relocation offers limited protection. Founders face a choice: scale domestically under Beijing’s expectations or pursue early, substantive separation from Chinese ecosystems.

Outlook

As the Meta-Manus deal’s resolution unfolds, the case is expected to influence future investment patterns and regulatory approaches. It underscores a broader shift toward “technological sovereignty,” where code and data carry implicit passports shaped by their origins.
For Singapore and similar bridge economies, balancing economic opportunities with compliance demands from rival powers will remain challenging. Chinese firms seeking global expansion must navigate an environment where transparency of corporate backgrounds has increased, and both Beijing and Washington prioritize national security over formal structures.
The episode illustrates the evolving nature of globalization in strategic technologies, where traditional offshore strategies confront new realities of great-power competition. Outcomes in the Manus matter will likely shape how Chinese AI innovation engages with international markets in the years ahead.  
With reporting by Asia Times, CNBC, Reuters and Yahoo! Finance

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