Germany has blocked the sale of a Volkswagen subsidiary to China on national security grounds, delivering a fresh blow to the already tense relationship with its biggest trading partner.

MAN Energy Solutions, part of the Volkswagen Group, said in June 2023 that it planned to sell its gas turbines business to Chinese state-owned CSIC Longjiang GH Gas Turbine Co (GHGT). But a German government review, initiated in September, raised concerns that China might use the gas turbines to power warships, according to Reuters.

The decision to block the deal comes just weeks after the European Union hiked tariffs on electric vehicles from China, sparking a trade dispute with Beijing, which days later launched an investigation into prices of EU pork.