China has blocked Meta’s acquisition of AI startup Manus, the top economic planning body said Monday, after a regulatory review that reportedly also saw Beijing restrict two co-founders from leaving the country.

Facebook owner Meta had agreed to acquire Manus, an artificial intelligence agent created by a company founded in China but now based in Singapore, the two firms said in December.

Analysts however had warned then the deal could fall foul of regulators at a time of fierce technological rivalry between Washington and Beijing.

The Financial Times reported last month that China had restricted two Manus co-founders from leaving the country, citing three people with knowledge of the matter.

Chief executive Xiao Hong and chief scientist Ji Yichao, who are usually based in Singapore, were reportedly summoned to a meeting in Beijing in March and told they were not allowed to leave China because of a regulatory review of the Meta acquisition.

Beijing’s National Development and Reform Commission said in a statement on Monday that it will “prohibit the foreign investment in the acquisition of the Manus project” and “requires the parties involved to withdraw the acquisition transaction”, without naming Meta.

It added that this was done “in accordance with laws and regulations”.

AFP has contacted Manus and Meta for comment.

Meta said in December that the deal — the financial details of which were not disclosed — would “bring a leading agent to billions of people and unlock opportunities for businesses across our products”.

Bloomberg Intelligence analysts said the purchase was likely aimed at expanding Meta’s AI agent task capabilities, and that it could be worth more than US$2 billion.

Manus, created by startup Butterfly Effect, can sift through and summarise resumes or create a stock analysis website, according to its website.

Beijing slammed on Monday an EU plan aimed to bolster the bloc’s industries against fierce competition from China, vowing countermeasures if it is enacted.

The EU unveiled in March new “Made in Europe” rules for companies trying to access public funds in strategic sectors including cars, green tech and steel, obliging firms to meet minimum thresholds for EU-made parts.

The proposal, held up for months by wrangling over the measures, is a key part of a European Union drive to regain its competitive edge, reduce its industrial decline and stave off hundreds of thousands of job losses.

Beijing’s commerce ministry said on Monday that it had submitted comments to the European Commission on Friday, expressing China’s “serious concerns” regarding the act it called “systemic discrimination”.

“If the EU… presses ahead with the legislation, and thereby harms the interests of Chinese companies, China will have no choice but to take countermeasures to firmly safeguard the legitimate rights and interests of its enterprises,” the commerce ministry warned in a statement.

See also: EU offers China alternative to tariffs in electric vehicles dispute

European businesses in many of the sectors concerned by the proposal have long lamented they face unfair competition from heavily subsidised Chinese rivals.

The EU proposal, formally known as the “Industrial Accelerator Act”, implicitly targets Chinese makers of batteries and electric vehicles by requiring foreign firms to partner with European firms and pass on technological know-how when setting up shop in the bloc.

The Chinese Chamber of Commerce to the EU said this month the plan marked a shift towards protectionism that would affect trade cooperation between the EU and China.