The German government on Wednesday blocked the sale of a chip factory to a Swedish subsidiary of a Chinese company, a decision that comes as Berlin grapples with its future approach to Beijing.

The move by the Cabinet follows a recent compromise over a Chinese shipping firm's investment in a German container terminal and a visit to Beijing last week by Chancellor Olaf Scholz, AP reported.

The blocked sale was anticipated after German company Elmos said this week that it had been informed the sale of its chip factory in Dortmund to Silex Microsystems AB of Sweden would likely be prohibited.

Silex is owned by Sai Microelectronics of China, according to German media. The planned 85 million-euro (dollar) sale was announced in December.

Although the proposed deal wasn't very significant financially and the technology involved apparently wasn't new, it had raised concerns over the wisdom of putting German IT production capacity in Chinese hands.

Western governments are increasingly wary of China's technological ambitions and assertive foreign policy. The US and other governments have tightened controls on access to processor chips and other technology.

Image courtesy: Unsplash