The German government has prohibited the planned sale of Volkswagen's gas turbine business to China.

According to information obtained by Reuters from government circles, the Federal Cabinet has approved a ban on the deal proposed by the Ministry of Economics. The government had argued that the gas turbine division of MAN Energy Solutions could not be sold to the Chinese CSIC Longjiang GH Gas Turbine Co (GHGT) under the Foreign Trade and Payments Act because its parent company, the shipyard group China State Shipbuilding Corp (CSSC), is too close to the country's military.

The Volkswagen subsidiary had already announced on Tuesday that it would accept the decision. According to company sources, the development of new gas turbines will then be discontinued, while profitable maintenance is to be retained. The MAN Energy division currently has 100 employees in Oberhausen and Zurich who produce and maintain gas turbines that are used to generate energy or to power pipelines - but possibly also for warships.

(Report by Andreas Rinke; edited by edited by Myria Mildenberger. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)