This just PRC finally applying their version of US export controls, i.e. PRC gets to control PRC originated algos, same argument as TikTok. The founders aren't held "hostage", they're under investigation for violating export control and national security laws. PRC hinted signalled pretty clearly they would use art12 (catch all clause) of export control laws and offshore affiliate rules (to address Singapore loophole) before Manus deal closed - Manus ignored loud hints. The difference is PRC wasn't super judicious in enforcing AI related export controls (especially since agent development new hence art12), US would have ensured this control list tech wouldn't leave US territory via foreign product rule / CFIUS / BIS. PRC gave pretty clear signals to Manus what was going to happen hoping they'd unwind on their own, but they didn't so now they're going to eat shit.

PRC still haven't gone the step up to ban PRC strategic talent from working in US like US has for PRC semi. Don't be surprised in 5-10 years US has to hire PRC workers with obfuscated identities like PRC dealing with US/TW talent in PRC EUV. Plenty more room how these things can escalate depending on how serious PRC starts to treat dual use AI.