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Germany’s cabinet has blocked Volkswagen’s plan to sell its gas turbine unit to a Chinese company, citing security concerns, Reuters reported.
In June 2023, MAN Energy Solutions, a subsidiary of Volkswagen Group, said it planned to sell its gas turbine business to Chinese state-owned enterprise China Shipbuilding Industry Corporation Longjiang GH Gas Turbine Co., Ltd. (GHGT).
However, a review launched by the German government in September raised concerns that China could use gas turbines to power its warships.
GHGT is part of China State Shipbuilding Corporation, which dominates China’s shipbuilding industry.
The decision comes amid rising trade tensions between the European Union and China. The German Economy Ministry may review and stop transactions that could have national security implications, while Berlin and the EU work to reduce risks in economic ties with Beijing.
The Chinese Ministry of Foreign Affairs expressed opposition to the politicization of normal economic and trade cooperation and the creation of artificial obstacles.
MAN Energy Solutions said it respects the government’s decision and will begin a structured process to phase out the development of its new gas turbines.
The German government has urged companies to reduce their reliance on China, Germany’s most important trading partner, and is pushing for a level playing field for companies.
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