China's National Development and Reform Commission has blocked Meta's $2 billion acquisition of Manus, citing security concerns. The decision marks the first public halt of a foreign investment acquisition in the AI sector since 2021. Despite Manus's offshore relocation to Singapore and a Cayman Islands holding structure, Chinese regulators deemed the company's core assets to be substantively connected to China, leading to the prohibition. The case highlights the failure of traditional offshore structures and sets a precedent for AI companies like Moonshot AI and ByteDance, emphasizing the need for clear compliance strategies. The decision underscores China's stringent regulatory stance on foreign investments, particularly in sectors involving critical technologies and national security.