The German government has thrown a wrench into the planned sale of Volkswagen subsidiary MAN Energy Solutions’ gas turbine division to a Chinese company, citing national security concerns. The decision, announced on Wednesday, comes after months of scrutiny by German officials who viewed the deal with suspicion.
MAN Energy Solutions, a leading developer and manufacturer of industrial gas turbines, had announced its intention to sell the division to Chinese state-owned CSIC Longjiang GH Gas Turbine Co. (GHGT) in June 2023. The deal, for an undisclosed sum, raised eyebrows in Berlin due to GHGT’s affiliation with the China State Shipbuilding Corporation (CSSC), a behemoth in China’s shipbuilding industry.
According to German regulations, the country’s Economy Ministry has the authority to review and ultimately block transactions deemed detrimental to national security. The ministry exercised this power in the case of the MAN Energy Solutions-GHGT deal, effectively scuttling the sale.
While the government has remained tight-lipped about the specific security concerns that prompted the decision, analysts believe it likely centers around the potential transfer of sensitive gas turbine technology to China. Gas turbines play a crucial role in various applications, including power generation and marine propulsion. The technology behind these turbines is highly advanced and can have both civilian and military applications.
Germany’s move to block the sale has sent a clear message to China regarding its stance on the transfer of strategically important technology. The decision comes amid heightened tensions between the two nations, particularly concerning economic issues and intellectual property.
The ramifications of the blocked deal are significant for both parties. For MAN Energy Solutions, the failed sale throws its future plans into disarray. The company had reportedly viewed the sale as a way to streamline its operations and focus on its core business. With the deal now defunct, MAN Energy Solutions will have to determine the fate of its gas turbine division.
The decision also deals a blow to China’s ambitions in the gas turbine sector. China has been striving to reduce its reliance on foreign technology, particularly in strategically important sectors. The acquisition of MAN Energy Solutions’ gas turbine division would have been a significant step forward for China in achieving this goal.
The German government’s decision to block the sale is likely to further strain relations with China. It remains to be seen how China will respond to this latest development and whether it will impact other ongoing economic ties between the two countries.