China has made clear that relocating a company's headquarters to Singapore is no longer enough to escape Beijing's control over AI technology. The case of Manus, an AI agent startup that moved entirely to Singapore in 2025 before being acquired by Meta, triggered a national security review and travel bans on its founders. This moment marks a turning point in the US-China AI race: the era of using offshore structures to bridge rival technology ecosystems is ending .

What Is 'Singapore Washing' and Why Did It Stop Working?

For years, Chinese tech companies seeking to escape domestic regulatory pressure and access international capital have relocated to more open Southeast Asian economies, particularly Singapore. The strategy was straightforward: move the company's legal headquarters abroad, maintain some operational ties to China, and gain access to Western investors and customers without the full weight of Beijing's oversight. Manus took this approach to an extreme in 2025, shutting down most of its China-based operations and terminating domestic employees to appear "clean" for acquisition by Meta .

But the strategy backfired. In March 2026, Manus co-founders Xiao Hong and Ji Yichao were barred from leaving China after meeting with the National Development and Reform Commission. By April 2, Beijing's position became explicit: it supports cross-border operations, but only those that "comply with Chinese laws and regulations and follow due procedure" .

The real issue, according to Beijing's doctrine, is that technological nationality follows where the technology was developed, not where the company is registered. What matters to Beijing is where the AI model was trained, where the data came from, and where the engineers acquired their expertise. Manus appeared to violate this principle by developing technology in China and then transferring it to a Western acquirer through a Singapore-based structure .

How Are the US and China Both Pressuring Southeast Asia?

The squeeze on Singapore and Malaysia comes from both superpowers, but for different reasons. The United States has pursued active containment of Chinese AI companies, framing the competition as a national security issue. In 2025 and 2026, the US took enforcement actions against entities in Singapore and Malaysia for allegedly diverting restricted Nvidia chips to China. Washington also pressured Malaysia to introduce chip export licensing and warned against deployment of Huawei Ascend chips .

Beijing's approach operates on a different logic but produces a similar outcome. The Manus case establishes a precedent that Chinese-developed technology cannot simply be relocated and sold to Western firms. However, ByteDance, the company behind TikTok, illustrates what appears acceptable to Beijing. ByteDance adopted the Singapore washing strategy early and expanded AI capacity in Malaysia to circumvent US chip export controls. Crucially, ByteDance has not severed ties with China; its core operations, data, and talent remain within the Chinese tech ecosystem. For ByteDance, Southeast Asia serves as an extension rather than an escape route .

• US Enforcement Focus: Targeting entities in Singapore and Malaysia for allegedly diverting restricted Nvidia chips to China and warning against Huawei Ascend chip deployment
• Chinese Regulatory Logic: Asserting that technological nationality follows development location, not corporate registration, meaning core technology, data, and intellectual property cannot be transferred abroad
• ByteDance Model: Maintaining core operations and talent within China while using Southeast Asia as an operational extension rather than an exit strategy

Why This Matters for Singapore and Other Bridge Economies

Singapore and Malaysia have positioned themselves as bridges in a bifurcating global AI landscape. By hosting Chinese firms, these countries attract foreign direct investment, talent inflows, and revenue from infrastructure like data centers. However, the Manus case and parallel US enforcement actions expose critical vulnerabilities in this model. Countries like Singapore cannot afford to be seen as conduits for sanctions evasion or as facilitating the transfer of Chinese intellectual property to US acquirers .

The implication is that Singapore and similar economies may need to strengthen regulatory frameworks to meet compliance expectations from both the US and China. In practice, this means developing more rigorous review mechanisms for cross-border AI transactions, ensuring companies comply with both US export controls and Chinese regulations on data and intellectual property transfers. The bridge model, once built on strong legal frameworks and investment-friendly ecosystems, now faces legal complexities around technology and data transfer that major powers increasingly enforce .

Steps for Southeast Asian Economies to Navigate the Bifurcating AI Landscape

• Strengthen Regulatory Review: Develop rigorous mechanisms to evaluate cross-border AI transactions and ensure compliance with both US export controls and Chinese data protection rules
• Clarify Technology Transfer Rules: Establish clear guidelines on what constitutes acceptable relocation versus prohibited intellectual property transfer to prevent becoming a sanctions evasion conduit
• Build Domestic AI Capacity: Invest in sovereign AI models and compute infrastructure to reduce dependence on being a bridge between rival ecosystems, following the model pursued by Gulf states and South Korea

Some countries have responded to the bifurcating AI landscape by pursuing a different path entirely. Gulf states, particularly the United Arab Emirates and Saudi Arabia, have invested heavily in domestic compute capacity and sovereign AI models, hoping to turn the current bipolar AI system into a multipolar one. South Korea, Japan, and India are pursuing similar strategies. However, sovereign AI is costly, requiring energy, compute power, and talent that many countries lack. For most Southeast Asian economies, the bridge model remains the most viable near-term strategy, making regulatory balance critical .

What Does the End of 'Singapore Washing' Mean for Tech Nationalism?

The Manus case signals a broader shift in how states approach technology and intellectual property. The AI era will not follow earlier patterns of offshoring, where companies freely leveraged offshore structures to maximize capital gains. States are tightening their grip on intellectual property, talent, and data. The era in which a small city-state or offshore holding structure could act as frictionless infrastructure between rival technology ecosystems is ending .

In an age of rising tech nationalism, every country in the AI supply chain must chart its own course. Neutrality is no longer a posture but a proof of work. For Singapore and Malaysia, this means developing the regulatory sophistication to satisfy both Washington and Beijing simultaneously, a challenge that may ultimately prove impossible for smaller economies caught between superpowers. For Chinese AI startups, the message is clear: you cannot simply relocate your way out of Beijing's oversight. For Western acquirers like Meta, the message is equally stark: acquiring Chinese-developed AI technology through offshore structures carries significant geopolitical risk .