GERMANY’S ruling coalition is divided over whether to let China’s COSCO Shipping Ports Ltd. take a stake in a Hamburg port terminal, government sources say, even as China urges Berlin not to politicize the bid and the port authority warns this could hurt the economy.

COSCO Shipping Ports, the terminal operator unit of shipping giant China COSCO Shipping Corp., last year made a bid to take a 35% stake in one of three terminals in Germany’s largest port in the northern city of Hamburg, a move that has been as a boost to the port’s throughput and efficiency as the COVID-19 pandemic disrupts global shipping and drives up shipping rates.

Hamburg, the second-largest port in Europe, enjoys a pivotal location as one of the most important trade hubs from Europe to China. It is also a significant node for China-EU freight trains.

German Economy Minister Robert Habeck of the Greens junior coalition party, which is particularly hawkish on China, said Tuesday he was leaning towards not allowing the deal, which would give China a stake in German critical infrastructure.

The chancellery, run by the senior coalition party the Social Democrats, is more in favor of finding a solution to any concerns, three government sources said. German Chancellor Olaf Scholz oversaw a boom in Chinese trade while he was mayor of Hamburg from 2011 to 2018.

Mao Ning, Chinese foreign ministry spokeswoman, said she hoped Germany would “view Chinese investment in an objective and rational light, and provide a fair, open and non-discriminatory environment for Chinese companies, rather than politicize normal economic and trade cooperation, still less engage in protectionism in the name of national security.”

Volker Treier, trade expert for the German Chambers of Industry and Commerce (DIHK), said he was concerned that if there’s no clear criteria for rejecting the investment, this could negatively impact Germany’s allure for investors generally.

Axel Mattern, marketing director of the Hamburg Port, warned against any veto, saying the Chinese investment would be a “huge win for the port rather than a danger, not least because COSCO will soon become the biggest shipping company worldwide.”

China’s fast expansion has driven growth in Europe’s largest economy over the past 10 years, with German carmakers currently relying on that market for as much as half their profits.

“A rejection of the Chinese would be a disaster not only for the port but for Germany,” Mattern said.

Scholz has warned of any decoupling from China or deglobalization in general, while also emphasizing the need for Germany to diversify its Asia trade and take strategic concerns more into account in its business dealings.

In another development, Habeck said Tuesday his government is working on a new trade policy with China to reduce dependence on Chinese raw materials, batteries and semiconductors, promising “no more naivety” in trade dealings with the Asian country.

Sources said last week Germany’s economy ministry was considering a raft of new measures to make business with China less attractive. This is the first time Habeck has made clear the tougher line was being translated into policy measures.

Habeck did not outline new measures in full, but said they would include closer examination of Chinese investments in Europe, such as infrastructure.

China has been Germany’s biggest trade partner for the past six years, with volumes reaching over 245 billion euros (US$246 billion) in 2021. (SD-Agencies)