Germany stops planned sale of VW's gas turbine business to China
- In Reports
- 08:50 PM, Jul 04, 2024
- Myind Staff
Germany has halted the sale of a Volkswagen subsidiary to China, citing national security concerns. MAN Energy Solutions, a part of Volkswagen Group, intended to sell its gas turbines business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT). A German government review, prompted by worries that China could use the turbines for military purposes like powering warships, led to the decision. This move follows recent trade tensions between the European Union and China, including increased tariffs on Chinese electric vehicles by the EU and a subsequent Chinese investigation into EU pork prices.
During a press conference on 3rd July, Germany's Economy Minister Robert Habeck emphasised that while Berlin welcomes foreign investments, it is crucial to safeguard technologies critical to "public security" from countries that may not maintain consistently friendly relations with Germany. This statement was echoed by Interior Minister Nancy Faeser, who supported the government's decision on security grounds.
Germany and China conducted trade amounting to €255 billion ($275.3 billion) last year, based on figures from the German government. However, bilateral relations have faced increasing tensions as Germany seeks to shield local industries and decrease its reliance on Chinese imports.
Germany has been cautious about its economic dependencies, particularly following the negative impact of its close ties with Russia after the Ukraine invasion, especially regarding reliance on Russian natural gas. Consequently, Germany aims to mitigate similar risks in the future.
In November 2022, Germany blocked the sale of a semiconductor factory to a Chinese-owned tech company, citing security concerns. This decision underscores Germany's commitment to safeguarding critical technologies from potential misuse. In response, a spokesperson from China's Ministry of Foreign Affairs criticised the politicisation of what they termed as normal commercial cooperation. They expressed hope for Germany to maintain a fair, just, and non-discriminatory business environment that accommodates companies globally, including those from China.
MAN Energy Solutions has expressed respect for the German government's decision, announcing plans to commence a structured shutdown process for its gas turbine division in the upcoming months, according to a company statement.
Meanwhile, the European Union is set to implement additional tariffs on imported electric cars from China, potentially increasing costs by up to 38%. These tariffs are scheduled to take effect starting this Friday for an initial period of four months. By November, the EU will make a decision on whether to extend these tariffs for a five-year period. In a statement issued on July 4th, the European Commission indicated that discussions with the Chinese government have intensified recently, aiming to find a resolution to the ongoing trade dispute.
Volkswagen, as Europe's largest car manufacturer, reiterated concerns about the timing of the EU's decision to impose tariffs on Chinese electric vehicles. The company emphasised that this decision comes at a particularly challenging time due to the current low demand for electric vehicles in Germany and across the region.
Volkswagen further stated that the adverse impacts of these tariffs outweigh any potential benefits for the European automotive industry, especially in Germany. This reflects their stance that the tariffs could exacerbate existing economic pressures faced by the industry.
Image Source: The Economic Times
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