Germany has blocked the sale of a Volkswagen subsidiary to China on national security grounds, delivering a fresh blow to the already tense relationship with its biggest trading partner.
MAN Energy Solutions, part of the Volkswagen Group, said in June 2023 that it planned to sell its gas turbines business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT). But a German government review, initiated in September, raised concerns that China might use the gas turbines to power warships, according to Reuters.
The decision to block the deal comes just weeks after the European Union hiked tariffs on electric vehicles from China, sparking a trade dispute with Beijing, which days later launched an investigation into prices of EU pork.
During a press conference Wednesday, Germany&rsquos economy minister Robert Habeck said that Berlin welcomes investments from foreign companies, but technologies relevant to &ldquopublic security&rdquo must be protected from countries &ldquowhich maybe do not always have a friendly relationship with us.&rdquo
A spokesperson for China&rsquos Ministry of Foreign Affairs said Thursday that China opposes the &ldquopoliticization&rdquo of &ldquonormal commercial cooperation.&rdquo
&ldquoWe hope that Germany will provide a fair, just and non-discriminatory business environment for companies from all over the world, including Chinese companies.&rdquo
In a statement Thursday, the European Commission said that &ldquoconsultations with the Chinese government have intensified in recent weeks,&rdquo with a view to resolving the dispute.／Representing Europe
MAN Energy Solutions said it respected the government&rsquos decision. &ldquo(We) will now initiate a structured process to close-down the gas turbine division, which will take place over the coming months,&rdquo the company added in a statement shared with CNN.
The additional EU tariffs, which could add as much as 38% to the cost of importing an electric car from China, will take effect from Friday for an initial period of four months. The EU must decide by November whether to adopt the tariffs for five years.
In a statement Thursday, the European Commission said that &ldquoconsultations with the Chinese government have intensified in recent weeks,&rdquo with a view to resolving the dispute.
Volkswagen, Europe&rsquos biggest carmaker, reiterated earlier comments that the timing of the EU decision is &ldquodetrimental to the current weak demand&rdquo for EVs in Germany and the region.
&ldquoThe negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry,&rdquo the company added in a statement.
