Germany has blocked the sale of a Volkswagen subsidiary to China on national security grounds, in a new blow to the already tense relationship with its largest trading partner.
MAN Energy Solutions, part of the Volkswagen Group, said in June 2023 that it planned to sell its gas turbine business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT). But a German government review launched in September raised concerns that China could use the gas turbines to power warships, Reuters reported.
The decision to block the deal comes just weeks after the European Union increased rates on electric vehicles from China, leading to a trade dispute with Beijing, which launched an investigation a few days later EU pork prices.
At a press conference on Wednesday, German Economics Minister Robert Habeck said Berlin welcomes investments from foreign companies but that technologies relevant to “public security” must be protected from countries “that may not always have a friendly relationship with us.”
At the same press conference, Interior Minister Nancy Faeser said she welcomed the government’s decision “for security reasons.”
Germany and China traded goods worth €255 billion ($275.3 billion) last year, according to German government figures. But Berlin’s relationship with Beijing has come under strain in recent years as Germany tries to protect local manufacturers and reduce his dependency about China.
The country has suffered greatly from its close economic ties with Russia following the invasion of Ukraine, particularly due to its heavy dependence on Russian natural gas, and wants to reduce the risk of something similar happening in the future.
In November 2022, Germany blocked the sale of one of its semiconductor factories to a Chinese technology company, also citing security concerns.
A Chinese Foreign Ministry spokesman said on Thursday that China opposes the “politicization” of “normal commercial cooperation.”
“We hope that Germany will provide a fair, just and non-discriminatory business environment for companies from all over the world, including Chinese companies.”
MAN Energy Solutions said it respected the government’s decision. “(We) will now start a structured process to close the gas turbine division, which will take place over the coming months,” the company added in a statement shared with CNN.
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