By Oliver Towfigh Nia
BERLIN (AA) – The German government on Wednesday turned down a potential Chinese investment in two domestic semiconductor producers, citing national security concerns as the major reason, according to local media reports.
Earlier in the day, the Cabinet prohibited Elmos, a German company based in Dortmund, North Rhine-Westphalia region, from selling a chip production facility to a Chinese company, Economy Minister Robert Habeck said, as Elmos also confirmed publicly.
He said unequivocally that China's planned acquisition of Elmos would have endangered public order and security in Germany.
The other case is subject to the company's trade secrets, so he cannot go into details, he added.
According to the Handelsblatt business daily, the second case of the blockade is linked to a Chinese investor's acquisition of the Bavarian company ERS Electronic. ERS Electronic is a multinational semiconductor equipment company.
The minister said Germany is an open market economy that welcomes foreign investment. However, he warned that "an open market economy is not a naive market economy."
China is and should continue to be a trading partner. However, there is a deliberate strategic approach, especially in the area of semiconductor and microchip production, Habeck said, fearing that trade and power interests could be used for power politics, possibly against Germany's interests.
It is particularly important to protect the technological and economic sovereignty of Germany and Europe in the semiconductor sector, he added.
Furthermore, the minister emphasized the importance of reducing reliance on certain critical sectors.
Chancellor Olaf Scholz, who visited China last week, has come under fire from his own center-left coalition government for agreeing to a partial Chinese investment in a Port of Hamburg terminal.
German-Chinese relations have lately faced strains as Berlin is reviewing its strategy towards Beijing.