The company, called Lianshu Science & Technology (Hangzhou), was established on July 18 with A$30 million ($32.6m) of registered capital, according to China's corporate record database. Lianshu literally means "face" and "book".
While Facebook noted that it was "still learning what it takes to be in China", this was seen as a long-awaited step forward, particularly given how much censorship controls have tightened under President Xi Jinping, who was formally appointed president in 2013.
But less than 24 hours later, the Chinese Government has already withdrawn its approval, marking Facebook as the latest company to get caught in the rising US-China trade war.
According to The New York Times, a registration notice showing that Facebook had gained approval to open a subsidiary has since been withdrawn.
The newspaper said it came from a disagreement between officials in Zhejiang and the national internet regulator, the Cyberspace Administration of China.
References to the new subsidiary were reportedly censored out of the country's own social media networks.
The ruling Chinese Communist Party holds a tight grip on all social media networks it deems potentially destabilising.
The government firewall consists of a series of internet filters that blocks access to sites Xi's party doesn't want viewed by anyone in the country's mainland. These range from social media and Western news to pornography and video sites.
The Government also routinely blocks any hashtags or other forms of content it believes may inspire protests or social unrest on its own social media channels, like WeChat and Weibo.
Earlier in the year, a Chinese version of the #MeToo movement — which in China was referred to as #MiTu and #RiceBunny — was rapidly silenced.
In a recent interview with Recode, Mandarin-speaking Facebook founder Mark Zuckerberg said investing in China remains a long-term goal.
"I think it's hard to have a mission of wanting to bring the whole world closer together and leave out the biggest country," he said.
"At some point, I think that we need to figure it out, but we need to figure out a solution that is in line with our principles and what we want to do, and in line with the laws there, or else it's not gonna happen," he said. "Right now, there isn't an intersection."
While it doesn't hold any offices in China, Facebook sells ads to Chinese companies and the Chinese Government.
According to the Times, China is the company's largest source of ad revenue in Asia.
