Beijing pulls a new lever | The weekly recap

Beijing just reached into its regulatory toolkit and pulled out a weapon it has never publicly used before – an obscure national security review mechanism that is blocking Meta's acquisition of Manus.

Some context: Manus is a Chinese AI agent startup that relocated to Singapore in June 2025. In December 2025, Meta acquired the company. 

• Beijing was never going to let that slide – and we flagged back in January that intervention was coming. 
• On April 27, China's macro planner (NDRC) issued a one-sentence notice ordering parties to the Meta-Manus deal to unwind the transaction. 

Rather than invoking antitrust regulations or export controls, the NDRC has chosen to act through a little well-known mechanism: The Measures for Security Review of Foreign Investments.

• This regulation requires foreign acquisitions of Chinese companies in sensitive sectors to undergo a national security review before completion.

The picture is still coming into focus – and there are two open questions we're tracking closely.

The first is jurisdiction. 

• The 2020 measures apply to transactions within the territory of the PRC – since Manus relocated to Singapore before the acquisition, the entity Meta purchased is not technically within Chinese territory.
• Beijing may argue that the original Manus parent entity still has an in-territory footprint that triggers the rules, or that the technology should never have been transferred abroad in the first place – effectively arguing China never lost jurisdiction. 
• The theory Beijing settles on matters enormously, because it will determine how broadly this precedent can be applied to other Chinese startups that have relocated overseas.

The second question is enforcement.

• If the measures determine an acquisition shouldn’t have proceeded, regulators can order the transaction to be unwound.
• If parties involved refuse, then the state can “order them to dispose of their equity or assets” and take further measures to restore the pre-investment situation – ominous in theory, but unclear in practice, particularly since neither Manus nor Meta is in China.

If Beijing wants to send a real message, it may need to mix and match the investment review rules with other regulations that carry heavier consequences, such as export controls with criminal liability.

However, a heavy-handed approach risks undermining China’s business environment.

• If companies can’t clearly determine what constitutes a prohibited “technology transfer,” risk-taking will slow, compliance costs will rise, and founders may become overly cautious or even opt for pre-emptive relocation.

The bottom line: The bigger picture here goes well beyond Meta and Manus.

• If Beijing cracks down too hard on tech companies moving abroad, it risks incentivising founders to avoid starting companies in China in the first place.
• But if Beijing lets this slide, what's to stop more strategically important startups, like DeepSeek, from doing the same?

We'll be tracking this closely for our Tech Daily subscribers – unpacking how Beijing's regulatory thinking evolves and what it means for businesses exposed to China's tech sector. 

• Click here to sign up for a free 30-day trial.

Kendra Schaefer, Head of Tech Research, Trivium China

What you missed

US-China

A delegation of five US Senators led by Steve Daines met with Premier Li Qiang, legislative chairman Zhao Leji, and top diplomat Wang Yi on Thursday, wrapping up a five-day China visit.

• Beijing views Daines as a useful backchannel to Washington in the run-up to US President Donald Trump’s hotly anticipated visit on May 14-15.
• Both Li and Zhao wanted to discuss Taiwan, calling the issue a “core interest.”
• At minimum, Beijing expects Washington to stick with its longstanding One China policy – though leaders may also view Trump’s upcoming visit as a chance to extract some concessions on Taiwan.

On Thursday, Semafor scooped that US officials are assembling a CEO delegation to accompany US President Donald Trump on his state visit to Beijing next week.

• Bigwigs from Nvidia, Apple, Exxon, Boeing, Qualcomm, Blackstone, Citigroup, and Visa head a growing list of invitees.
• According to Semafor, a 500-plane Boeing MAX order and soybean purchases are in the offing – but Chinese EV manufacturing in the US is likely not.

Foreign affairs

On Wednesday, top diplomat Wang Yi had a debrief on US-Iran negotiations from Iranian Foreign Minister Abbas Araghchi in Beijing.

• Araghchi implored China to help end the conflict: “Iran…looks forward to China continuing to play an active role in promoting peace and ending the war.”
• Wang said China is willing to “play a greater role in restoring peace” and fostering regional stability – but in a supporting role: “The Gulf and Middle Eastern countries should keep their destiny in their own hands.”

Econ and finance

China’s secondhand housing market may finally be in recovery mode. According to April data from China Real Estate Information Corp. (CRIC):

• Across 20 major cities, resale transaction volume by floor space jumped 17% y/y – a sharp pickup from the 6% y/y growth posted in March.
• Shanghai (+20%) and Chengdu (+18%) were among the top performers, helped by supportive local policies rolled out in Q1.

April PMI data suggests China’s manufacturing base is holding up better than expected in the face of the Iran war.

• The RatingDog PMI surged to 52.2, up sharply from 50.8 the previous month.
• The NBS manufacturing PMI edged down marginally to 50.3, from 50.4 in March.
• But all three enterprise size categories – large, medium, and small – registered above the 50 threshold simultaneously, only the second time this has happened since 2024.

Business environment

On May 2, China’s Ministry of Commerce (MofCom) directed Chinese entities not to recognize, enforce, or comply with US sanctions on five Chinese refiners blacklisted for handling Iranian crude.

• This marks the first invocation of MofCom’s 2021 Blocking Rules.
• The moves is a response to the US Treasury’s April 24 announcement that it had sanctioned a fifth Chinese teapot refiner – Hengli Petrochemical (Dalian) – for processing Iranian crude, having added the first four last year.

China’s financial regulator (NFRA) has reportedly told major state banks to pause new loans to five US-sanctioned refiners while they review exposure.

• The US Treasury blacklisted Hengli Petrochemcial and four other Chinese refiners in late April over their Iranian oil purchases, warning banks they risk secondary sanctions for supporting these transactions.
• Beijing is trying to project defiance publicly while protecting its systemically important banks from losing USD clearing access.

Tech

On April 30, Bank Indonesia announced that its national QR payment system (QRIS) is now interoperable with China’s QR payment ecosystem.

• Chinese travelers can now use domestic mobile apps – such as Alipay or UnionPay – to scan QRIS codes at over 40 million Indonesian merchants.
• Indonesian consumers likewise can use their domestic e-wallets to pay Chinese merchants.
• Settlement runs through the direct rupiah-RMB mechanism established by Beijing and Jakarta in 2020, bypassing the dollar.

On May 3, Qiushi published an in-depth review of China’s AI industry.

• The report acknowledges that compute shortages are dragging on China’s AI R&D and attributes this entirely to US chip controls, while omitting that Beijing has left Nvidia H200 compute on the table.
• It also argues that AI competition is a full-stack competition: “What we face is not a bottleneck in any single technology, but a full-stack competition spanning everything from underlying hardware to upper-layer ecosystems.”

Net zero

On Thursday, the Party Central Committee and State Council general offices issued measures to evaluate provincial progress toward Xi Jinping’s flagship “Beautiful China” environmental initiative.

• These come hot on the heels of a new landmark provincial cadre climate accountability system released two weeks ago.
• Provinces will now be graded against KPIs covering air quality, water and marine ecology, and soil health, as well as progress on low-carbon transition, pollution control, and environmental safety.

Politics

On Thursday, Wei Fenghe – Minister of Defense from March 2018 to March 2023 – was convicted of bribery and sentenced to death with a two-year reprieve.

• Li Shangfu – Minister of Defense from March to October 2023 – was convicted of both accepting and offering bribes, and received the same punishment.
• The investigations into Wei and Li kicked off in 2023 as part of an unprecedented military anti-corruption campaign that has since purged roughly 90% of China’s senior generals.

As always, it was a busy week in China.

• Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.