Germany blocks VW's gas turbine business sale to China amid security concerns

Germany’s cabinet has vetoed the sale of gas turbine business of MAN Energy Solutions, a Volkswagen subsidiary, to a Chinese company over security in the backdrop of worsened trade relations between EU and China. The move shows the Germany economy ministry’s power to freeze and monitor deals, which may be dangerous to the nation’s security like other attempts by Berlin and EU to decrease the risks of China to economies dependency.

Blacklisting by German Officials of the proposed sale to the Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT) for an undisclosed amount of money was declared in June 2023, and this hurry prompted Germany’s anti-terrorism agency to blacklist the company. A large part of the Chinese shipbuilding industry is owned by GHGT, affiliated with China State Shipbuilding Corporation (CSSC) and the Merkel administration frets that turbines might be used in the military.

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Interior Minister Nancy Faeser appreciated the decision at a news conference focusing on security-threat aspect of it. As a result, China’s Ministry of Foreign Affairs stated its disagreement with the political-economy approach to business relations and called for creating artificial constraints, but there should be equal and mutually beneficial economic partnership.

Thus, the openness of Germany to invest has still been highlighted by Economy Minister Robert Habeck though he focused on the protection of the technologies that are essential for maintaining public order and that define the government’s decision to block the deal. MAN Energy Solutions accepted the decision and provided assurances that there would be a gradual phase-out of the firm’s gas turbine development work to induce less impact to each of its employees, clients, and affiliates.

The German government has also encouraged cutting on dependence on China – Germany’s top trading partner and has called for favourable treatment of businesses. On the other hand, the EU has acted against what it considers unfair Chinese subsidies in electric vehicle manufacturing though there are voices within Germany to stop the planned tariffs on Chinese goods.