The government of Chancellor Olaf Scholz blocked the sale of a semiconductor company to a Chinese-owned firm on Wednesday, as Germany seeks to toughen protection of its domestic technology and ease its dependence on China.
Robert Habeck, Germany’s economy minister, said that the government had also blocked a separate investment in a German company producing critical infrastructure, which he said could not be identified because of secrecy agreements.
The moves come days after Mr. Scholz returned from a trip to Beijing, where he met with President Xi Jinping for discussions that focused on Russia’s ongoing war in Ukraine, as well as economic ties between the two countries. China is Germany’s largest trading partner, exchanging goods worth more than 245 billion euros (about $246 billion) last year.
But German officials have grown wary of being overdependent on China. More than a million German jobs are directly dependent on trade with China, and many more indirectly, while almost half of German manufacturing businesses relying on China for some part of their supply chain.
There is also growing frustration in Berlin over Beijing’s refusal to grant foreign companies equal treatment in China that Chinese companies enjoy in Germany and elsewhere in Europe. Especially regarding critical infrastructure and technology, there is growing concern over allowing Beijing’s state-owned companies too much access.
“Particularly in the semiconductor sector, it is important for us to protect the technological and economic sovereignty of Germany and Europe,” Mr. Habeck told reporters on Wednesday. “Of course, Germany is and will remain an open investment location, but we are not naïve either.”
Mr. Habeck named Elmos Semiconductor, based in Dortmund, as one of the companies that had been denied approval for foreign investment.
Elmos announced nearly a year ago that it had planned to spin off its wafer fabrication facility, which produces chips mainly used in the auto industry, into a separate entity that was to be acquired by Silex Microsystems, a Swedish firm wholly owned by a Chinese company.
From the outset, the €85 million deal was subject to government approval because it involved a foreign firm buying a German company.
On Wednesday, Elmos issued a statement saying it regretted the government’s decision, and that the deal would have strengthened chip production in Germany. It said it would “analyze the decision” and “decide whether to take legal action.”
Mr. Habeck declined to name the second company whose sale was blocked, noting that the firm’s internal secrecy agreements prevented him from doing so. But the German business daily Handelsblatt reported that it involved ERS Electronic, a company focused on cooling technology based in Bavaria.
A spokeswoman for ERS said the company had discussed “an investment by a Chinese private equity firm,” but added that it had not yet received any information from the government on a decision.
Last week, before leaving for Beijing, Mr. Scholz overruled the recommendation of six of his ministries and both domestic and foreign intelligence chiefs to allow Cosco, a Chinese state-owned shipping company, to buy a stake of up to 25 percent in a container-handling terminal in Hamburg, Germany’s most important port.
Cosco originally sought to acquire a 35 percent stake, but that was scaled back after widespread political and public outcry over security concerns.
Mr. Scholz traveled to China with a delegation of 12 German business leaders, even as he has sought to encourage German firms to diversify their trade ties in Asia. Both he and Mr. Habeck will travel to Singapore next week to take part in a wider Asian business conference.