Germany Blocks Major Deal with China: Security Concerns Arise

05 Jul, 2024

Germany Blocks Major Deal with China: Security Concerns Arise

Germany has blocked the sale of Volkswagen’s MAN Energy Solutions gas turbines business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co, citing national security concerns. This decision marks a significant move in Germany’s ongoing effort to safeguard critical technologies and manage relations with China, its largest trading partner. The proposed sale, which was announced in June 2023, was put on hold after a government review in September raised alarms that the gas turbines could potentially be used for military applications.

This action follows a series of recent tensions between Germany and China, including the European Union's decision to increase tariffs on Chinese electric vehicles, which has intensified the trade dispute between the two powers. German Economy Minister Robert Habeck stated that while foreign investments are welcomed, technologies essential to public security must be protected from nations that might not always maintain friendly relations with Germany. The decision also echoes Germany’s past caution, demonstrated by its previous move to block the sale of a semiconductor factory to a Chinese company due to similar security concerns.

MAN Energy Solutions has announced that it will begin the process of closing down its gas turbine division over the coming months. This decision aligns with broader EU efforts to address trade imbalances and security issues in its relationship with China, including recent investigations into Chinese trade practices.