In the News: Germany Blocks Chinese Gas Turbine Deal; China Tops the World in Use of Generative AI; and New Regulations for Chinese Short Films

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Germany Blocks Chinese Enterprise from Buying Volkswagen Gas Turbine

On July 3, the German government blocked a transaction that involves the sale of MAN Energy Solutions' gas turbine business to a state-owned Chinese shipbuilding company due to national security concerns, according to report from the South China Morning Post (SCMP). It is possible that CSIC Longjiang's close links to the Chinese military fueled the rejection of the deal. The plan, announced on June 20, would have had CSIC Longjiang GH Gas Turbine take over MAN operations in Oberhausen and Zurich to develop new gas-turbine product lines. The company is a subsidiary of China State Shipbuilding Corporation, which also makes engines for Chinese naval vessels.

Germany's Economy Minister Robert Habeck referred to Germany's Foreign Trade and Payments Act in confirming the block of the sale. Under the terms of the Act, the German government can prevent companies from selling stakes in businesses to buyers outside the European Union if the transaction is considered a possible national security and public order threat. This law protects "technologies that can be a danger to public safety and order from information leaks or from the influence of countries that are not always on friendly terms" with Germany, Habeck said. The German government is allowed to review or block foreign purchases of stakes as low as 10% in "critical technology" and "critical infrastructure" industries.

Moreover, on the same day the German Economy Ministry also decided to examine the consequences of private equity fund Luxcara's reservation agreement with Ming Yang to supply offshore wind turbines for Germany's 296 MW Waterkant project. The German, Danish and European energy industries fear distortion of competition if cheap Chinese turbines flood the European market. Whether the transaction is a "critical infrastructure issue" that needs to be addressed will be deliberated. On a recent trip to China, Habeck spoke with Chinese government representatives about the growing concerns in Germany and the European Union surrounding the export of products to China that could have both civilian and military uses. Germany is cautious about being over-reliant on China and allowing critical infrastructure to be controlled by Chinese state-linked companies. In November 2022, Germany also prevented the sale of a German semiconductor factory to a Chinese-owned tech company due to national security concerns.