HAMBURG: Germany's coalition government on Wednesday allowed a Chinese firm to buy a reduced stake in a Hamburg port terminal, after Chancellor Olaf Scholz resisted calls to ban the controversial sale outright over security concerns. Under the compromise agreed by Scholz's cabinet, Chinese shipping giant Cosco will be allowed to buy a stake "below 25 percent" in the Tollerort container terminal owned by HHLA, the economy ministry said in a statement.

"The reason for the partial prohibition is the existence of a threat to public order and safety," said the ministry. China's state-owned Cosco had initially sought a 35-percent stake and the deal would have automatically gone ahead if a compromise solution wasn't found this week.

The agreement comes ahead of Scholz's visit to China next week as the first European Union leader to make the trip since November 2019. Scholz, a former Hamburg mayor, backed the Cosco deal and has repeatedly stressed the importance of strong trade ties between China and Europe's biggest economy.

But six ministries wanted to veto the sale, including those of defense, economy and foreign affairs, at a time of heightened concerns about critical infrastructure falling into foreign hands. The row caused a rift between Social Democrat Scholz and his coalition partners, the Greens and the liberal FDP, who said lessons had to be learned from Germany's breakdown in ties with Russia.

Beijing welcomed Wednesday's green light and accused critics of "hyping up" the acquisition. "Cooperation is mutually beneficial. We hope the relevant parties will view pragmatic cooperation between China and Germany rationally and stop baselessly hyping it up," said foreign ministry spokesman Wang Wenbin.

'Naive'

Badly burned by the over-reliance on Russian gas imports, many in Germany are wary of falling into the same trap and becoming too dependent on China economically. The European Commission also warned against the Hamburg project, a source close to the matter told AFP at the weekend, amid fears sensitive information about activity in the port could be relayed to China's government. The agreement to settle for allowing a reduced stake of 24.9 percent, thereby depriving Cosco of voting rights, "reduces the acquisition to a purely financial participation", the economy ministry said.

But the face-saving compromise failed to silence critics. Anton Hofreiter, a Green party lawmaker and chairman of the German parliament's European affairs committee, said approving the deal was the wrong decision. Scholz's argument "that this is a purely commercial project is fatally reminiscent of the statements on Russia and Nord Stream (gas pipelines)," he told Funke media group.

"The attitude can be described as naive at best," he said. Franziska Brandmann, leader of the FDP's youth wing, likewise accused the government of being "naive about security policy". Conservative opposition leader Friedrich Merz said Germany needed "a reassessment of its relationship with China", noting that the Asian giant was becoming "more repressive" at home and "increasingly aggressive" abroad.

Tougher stance

Chinese firms already hold stakes in other European ports, including Rotterdam and Antwerp, but the EU's stance against Beijing has hardened since then. Germany too has in recent years taken a closer look at Chinese investment in sensitive technologies and other areas, and reserves the right to veto acquisitions. The economy ministry said Wednesday that as part of the Cosco compromise, the Chinese firm would not be allowed to appoint senior staff members or have a veto right on strategic business decisions. Any future attempt to increase the shareholding above the 25-percent threshold would trigger a fresh government review, the ministry added.

China is a key trading partner for Germany, especially for its flagship automotive industry. But the relationship has been soured in recent years by China's strict zero-COVID policy, the escalation of tensions over Taiwan and concern over human rights issues in the Muslim-dominated Xinjiang region.

The boss of Germany's BASF warned Wednesday against "China bashing" and said the chemicals giant would push on with major investments there, despite concerns about growing economic dependence on the Asian giant.

The company is building up its business in Asia as its European operations come under pressure, particularly due to the surging price of energy triggered by the Ukraine war. But there are worries about German firms becoming too economically reliant on authoritarian China, as the Europe's economic powerhouse smarts from years of over-dependence on Russian gas imports.

CEO Martin Brudermueller insisted BASF's expansion plans in the country, where it is building a 10-billion-euro ($10 billion) chemical complex, had not changed. While recognizing there are "concerns" about what happens in China politically, he said: "We have business relations which are important for the German economy... We have an extremely profitable China business."

The firm had asked "critical questions" about its Chinese investment, but decided that it was "a good opportunity," he said. Speaking more broadly about economic ties, he urged: "Let's move away from China bashing." Germany needed to "look more at ourselves... at our weaknesses," added the chief executive, who will be among a business delegation accompanying Chancellor Olaf Scholz on a visit to China next week.

His comment's came after a row erupted in Germany's coalition government about whether to allow a Chinese firm to buy a stake in a Hamburg port terminal. Scholz ultimately defied calls from six ministries to veto the sale over security concerns, instead permitting the company to acquire a reduced stake.

Brudermueller also defended the forthcoming China trip: "I think it is a good signal in this moment to go there." Earlier this month, BASF unveiled a plan aimed at cutting costs by 500 million euros, which will be focused on Europe and particularly Germany, and will include job losses.

On Wednesday, Brudermueller said costs would have to be cut "permanently" in Europe, citing a weakening regional market and surging energy costs. BASF reported a net profit of 909 million euros in the third quarter, down from 1.25 billion during the same quarter last year. -AFP