Germany has blocked the sale of a Volkswagen subsidiary to China on national security grounds, further straining the relationship between the two major trading partners. MAN Energy Solutions, a part of the Volkswagen Group, had announced its intention to sell its gas turbines business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT) in June 2023. However, a German government review initiated in September raised concerns that China could potentially use the gas turbines for military purposes, specifically to power warships.
This decision comes amidst escalating tensions between the European Union and China, with the EU recently imposing tariffs on Chinese electric vehicles, prompting retaliatory measures from Beijing. Germany's Economy Minister emphasized the importance of protecting technologies crucial for public security from countries with which Germany may not have friendly relations.
Germany's trade relationship with China is significant, with goods worth €255 billion ($275.3 billion) exchanged between the two countries last year. However, Germany has been actively seeking to reduce its reliance on Chinese imports and safeguard its domestic industries. This move follows a similar decision in November 2022 when Germany blocked the sale of a semiconductor factory to a Chinese-owned tech company due to security concerns.
In response, China's Ministry of Foreign Affairs expressed opposition to the politicization of normal commercial cooperation and urged Germany to provide a fair and non-discriminatory business environment for companies worldwide. MAN Energy Solutions has accepted the government's decision and announced plans to close down its gas turbine division in the coming months.
The strained trade relations between Germany and China underscore the complex dynamics at play in the global economy, as countries navigate security concerns while balancing economic interests.
