BERLIN (AP) 鈥� 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 in a German container terminal and a last week by Chancellor Olaf Scholz.
The government's red light was anticipated after German company Elmos said this week that it had been informed the 85 million-euro (dollar) 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.
Although the deal announced in December wasn鈥檛 very significant financially and the technology involved apparently wasn't new, it raised concerns over the wisdom of putting German IT production capacity in Chinese hands.
German Economy Minister Robert Habeck said the government also blocked a second planned investment by an investor from outside the European Union, but he wouldn't give details because it is still subject to the business confidentiality of the company involved.
In stopping both deals, Habeck said security in Germany must be protected and 鈥渢here is a particular need to protect critical production areas.鈥�
鈥淲hat is important is the political message that we are an open market economy, that foreign investments 鈥� including from countries outside the (European) Union 鈥� are wanted and welcome here, but an open market economy is not a naive market economy,鈥� he told reporters.
Western governments are increasingly wary about China鈥檚 technology ambitions and assertive foreign policy. The United States and other governments have tightened controls on access to processor chips and other technology.
Scholz鈥檚 nearly year-old government has signaled a departure from predecessor Angela Merkel鈥檚 firmly trade-first approach to China. It plans to draw up a 鈥渃omprehensive China strategy.鈥�
That is still pending. But Foreign Minister Annalena Baerbock and others have made clear that Germany wants to avoid repeating mistakes it made with Russia, which used to supply more than half of the country鈥檚 natural gas and .
However, a decision last month pointed to unresolved questions about the extent to which Chinese companies should be allowed to invest in Europe鈥檚 biggest economy.
Officials argued over whether to allow China鈥檚 COSCO to take a 35% stake in a container terminal at the Hamburg port.
Members of two junior parties in the governing coalition opposed that deal, while Scholz, a former Hamburg mayor, downplayed its significance. The Cabinet eventually cleared COSCO to take a stake below 25%. Above that level, an investor can block a company鈥檚 decisions.
Scholz is encouraging companies to diversify but not discouraging business with China. He said that 鈥渨e don鈥檛 want decoupling from China鈥� but that 鈥渨e will reduce one-sided dependencies in the spirit of smart diversification.鈥�
A Chinese foreign ministry spokesman, Zhao Lijian, said earlier Wednesday that he didn鈥檛 know about the chip factory sale but urged Scholz鈥檚 government to treat Chinese companies equally.
Zhao called on Germany to 鈥減rovide a fair, open and non-discriminatory market environment for normal operation of all companies鈥� and avoid 鈥渦sing national security as a pretext for protectionism.鈥�
Geir Moulson, The Associated Press
