new rules<\/a> banning American groups from investing in Chinese AI. The US Treasury Department is reviewing the transaction, according to two people familiar with the matter.\u00a0\u00a0<\/p>\nThe outcry underscores how politically fraught China and AI have become in the US, as competition to lead in the technology emerges as another flashpoint between the two superpowers. It leaves investors walking a tightrope of trying to navigate geopolitics while hunting for promising start-ups.\u00a0<\/p>\n
\u201cIt used to be that you could build for both China and the world,\u201d said one venture investor in Beijing. \u201cThat\u2019s increasingly no longer possible for AI. You have to choose one.\u201d<\/p>\n
Manus was a breakout star of China\u2019s AI boom this spring. In March, demand to try Manus, which calls itself a general purpose AI agent, was so high that access codes were being resold for thousands of yuan on Alibaba\u2019s Xianyu ecommerce platform. State broadcaster CCTV featured the product in prime time, praising its ability to \u201ccomplete tasks step by step, just like a real human team\u201d.\u00a0<\/p>\n
People familiar with the Manus team said they were unprepared for the domestic spotlight, having originally built Manus for the global market. <\/p>\n
The app runs on top of Claude, a large language model from US-based Anthropic, which caused compliance issues when operating in China. <\/p>\n
The team rushed to start building a second version on China-approved models from Alibaba. \u201cOur two technical teams have started working closely together,\u201d Manus tweeted on its Weibo account on March 11.\u00a0<\/p>\n
![\"The](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/08\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/759552f8-64d3-4cd7-aa29-9e7d4ff0797c.jpg\")
Manus said moving to Singapore was a business decision, not one pushed by Benchmark \u00a9 Wang Gang\/VCG\/Getty Images<\/p>\n
Then came the Benchmark-led deal in April. The $75mn investment valued Butterfly Effect, Manus\u2019s parent company, at almost $500mn, a far higher valuation than domestic investors would award it, according to PitchBook. Co-founders Xiao Hong and Zhang Tao visited Silicon Valley and met top tech executives, including Microsoft\u2019s chief executive Satya Nadella.<\/p>\n
Criticism of Benchmark began to mount in Washington. It was seen as a first test of new rules designed to curb American investment in Chinese AI that went into effect in January. Rivals such as Founders Fund\u2019s Delian Asparouhov called Benchmark\u2019s partners \u201cassets to China\u201d on X.<\/p>\n
\u201cThere are a handful of investors who are willing to test the boundaries of decoupling, and testing whether they can still invest,\u201d said a former top US security official. \u201c[But] the signal is that the door will close.\u201d<\/p>\n
An investor in Benchmark\u2019s funds said the outcome of the Treasury review remained unclear but a worst-case scenario could require the firm to divest. \u201cThey walked into the spotlight \u2014 in this fraught environment, it\u2019s surprising.\u201d<\/p>\n
Benchmark and the Treasury department declined to comment. A person close to the Trump administration said Benchmark was not welcome in Washington for as long as it was not on \u201cTeam America\u201d.<\/p>\n
By mid-July, the team behind Manus had dropped plans to launch a Chinese version of the hit app. The growing team in the Chinese capital was mostly laid off, while efforts increased to fill more than 20 new positions in Singapore. The core team will also move to the city state. <\/p>\n
Visitors to the Manus website from inside China now encounter a message similar to the one shown by other foreign AI providers: \u201cManus is not available in your region.\u201d Its social media posts, such as the one hailing the Alibaba co-operation, have disappeared.<\/p>\n
\u201cWe\u2019re not sure what happened with Manus,\u201d said a member of Alibaba\u2019s cloud team.\u00a0\u201cThey just one day decided to go abroad.\u201d <\/p>\n
A spokesperson for Manus said it was a business decision to move to Singapore and not one pushed by Benchmark.<\/p>\n
The American VC firm has nonetheless taken much of the blame for the debacle in China, with media highlighting a similar Benchmark financing deal for AI start-up HeyGen that abandoned Shenzhen for Los Angeles.<\/p>\n
\u201cIt\u2019s normal for the general public to be unhappy about what\u2019s happened,\u201d said Li Chengdong, head of Haitun internet think-tank. \u201cBut in the industry, our views are more rational \u2014 they need computing power and foreign capital. Most AI products in China are free.\u201d<\/p>\n
The founders have said little publicly about the decision to move abroad.\u00a0But last year, Xiao Hong, who is in his early thirties, made it clear why he wanted to build AI software for foreign markets, saying he used basic maths to convince his team.<\/p>\n
\u201cI told them the willingness to pay for software is much higher overseas \u2014 maybe five times that of Chinese users,\u201d he said on a podcast. \u201cAnd you can charge in dollars. With the exchange rate at seven, that\u2019s five times seven equals 35. It\u2019s at least a 35-times larger market.\u201d<\/p>\n
Video: AI is transforming the world of work, are we ready for it? | FT Working It<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"On a recent weekday, the Beijing office of the company behind Manus, a popular artificial intelligence \u201cagent\u201d, was…\n","protected":false},"author":2,"featured_media":336798,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3163],"tags":[323,1942,53,16,15],"class_list":{"0":"post-336797","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-technology","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115012416747929406","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/336797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=336797"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/336797\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/336798"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=336797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=336797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=336797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}