Germany’s Economy Ministry Halts Transactions with National Security Implications Amid Rising Tensions with China

Germany’s economy ministry has halted transactions with national security implications, including the planned sale of the gas turbine business of Volkswagen unit MAN Energy Solutions to a Chinese company. This decision comes at a time of rising trade tensions between the EU and China, prompting Berlin to review its economic ties with Beijing and work to minimize risks.

The planned sale to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT) was announced in June 2023, with the China State Shipbuilding Corporation (CSSC) owning GHGT. Concerns among German politicians have been raised that China may use the gas turbines for military purposes rather than civilian use. Interior Minister Nancy Faeser and Economy Minister Robert Habeck both welcomed the decision citing security reasons and the need to protect technologies essential for public order.

MAN Energy Solutions has respected the government’s decision and will begin a structured process to wind down the development of gas turbines. The company, with 14,000 employees, plans to carry out this phase carefully, considering the interests of employees, customers, and partners. While the group will retain its profitable turbine service business, the German government is urging firms to lessen their dependence on China and is advocating for a fair playing field for companies in the EU.

In addition to blocking the sale, the EU is taking action against what it perceives as unfair Chinese subsidies in the electric vehicle sector. Germany’s VDA auto association has called on