Germany Blocks Sale of Gas Turbine Unit to State-Owned Chinese Shipbuilder

(Bloomberg) -- The German government blocked the sale of a gas turbine business owned by MAN Energy Solutions SE to a state-owned Chinese shipbuilding company over national security concerns.

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Under the deal, which was announced on June 20, CSIC Longjiang GH Gas Turbine Co., Ltd. would have taken over MAN operations in Oberhausen and Zurich to work on developing new gas-turbine product lines. The company, a subsidiary of China State Shipbuilding Corporation, develops small and medium-sized turbines, and makes engines for Chinese naval destroyers.

Economy Minister Robert Habeck confirmed the decision to stop the sale and cited Germany’s Foreign Trade and Payments Act. Under the terms of the legislation, the government can prevent companies from selling businesses to owners outside the European Union if that is deemed to pose a threat to national security and public order.

“The restriction that we have to put in place by law is that we protect technologies that can be a danger to public safety and order from information leaks or from the influence of countries that are not always on friendly terms with us,” Habeck said Wednesday at a news conference in Berlin.

CSIC Longjiang’s close ties to the Chinese military are the main reason why the German government rejected the deal, according to people familiar with the thinking behind the decision, who asked not to be identified as the deliberations were confidential.

MAN doesn’t share the government’s view that the turbine technology could be used for military purposes, according to a person familiar with the company’s position.

A spokesperson for MAN told Bloomberg by phone that the company plans to respect any decision the government makes once it’s officially disclosed. CSIC Longjiang was not immediately available for comment outside of normal business hours in China.

On a recent trip to China, Habeck spoke with Chinese government representatives about Germany and Europe’s growing caution around exporting goods to the Asian nation that could be deployed for both civilian and military purposes.

Germany’s Handelsblatt newspaper first reported the Economy Ministry’s decision to reject the deal.

--With assistance from Foster Wong.

(Updates with CSIC not immediately available for comment in seventh paragraph)

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