Germany’s cabinet blocked the planned sale of the gas turbine business of Volkswagen unit MAN Energy Solutions to a Chinese company on Wednesday (3 July) for security reasons. This decision comes at a time of rising trade tensions between the EU and China, prompting Germany’s economy ministry to review and halt transactions with national security implications. Both Berlin and the EU are working to minimize risks from economic ties with Beijing.
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 the European Commission to drop its proposed tariffs in response to the situation.