Germany may give China smaller stake in Hamburg port deal

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Germany could give Chinese shipping giant Cosco a smaller stake than originally planned 35% in a Hamburg port, a source in the German ministry of economy told Reuters on Tuesday. 

According to the source, Berlin is mulling the smaller stake as an "emergency solution" to have the deal approved by the country's cabinet while mitigating the impact of Chinese investors on the Chinese economy.

The European Commission had warned Germany months ago against allowing Chinese investors to invest in the Hamburg port, a source familiar with the matter told AFP on Saturday amid criticism of Chancellor Olaf Scholz over his backing of the transaction.

Cosco attempted last year to take a 35% stake in a terminal in Germany's largest port, but Berlin was divided over whether it should go ahead or not.

If everything goes as planned, Berlin will be approving just less than a quarter, 24.9%, of the terminal to Cosco, as per several government sources. The deal is set to be discussed by the cabinet on Wednesday.

The sources, however, underlined that the German foreign and economy ministries wanted to completely block the deal over worries regarding China knowing about maritime activity in the port.

Reportedly, the European Commission was worried that Beijing would benefit from "sensitive information" about activity in the port, which is the third-busiest in Europe. The EU's recommendation was non-binding, giving Germany the final say on the deal.

Scholz's office, according to German broadcasters NDR and WDR, was planning on approving the deal despite six ministries going against him.

The two German outlets said the deal would effectively be approved automatically if the government did actively decide to take a u-turn by the end of October.

"The economy ministry has the position that we should not have Chinese investment in critical infrastructure if possible," Economy Minister Robert Habeck said in Luxemburg on Tuesday following an EU energy ministers' meeting.

According to Habeck, Berlin is yet to agree on a joint position on the matter.

After attending an EU summit on Friday, Scholz said he would be visiting China in November amid growing distaste for Beijing in Brussels over its growing foothold in the global economy, as well as its warming ties with Russia in light of the West's enmity for Moscow.

However, the EU heads of state agreed after the summit that they were not after a confrontation with China, wanting to cooperate with Beijing on climate change, among other issues.

Those in support of the deal argue it will help Hamburg to keep up with its rivals that are also competing for Chinese trade amid China's growing influence around the globe.

"The federal government departments involved see a limit to 24.9% as an 'emergency solution' to prevent worse things from happening," the economy ministry source said. They also highlighted that Cosco having a smaller stake in the terminal would give it less authority and less of a say.

"Of course, this does not solve the actual risk issues, so the departments continue to believe that a complete ban is the right way to go," the source said, speaking on condition of anonymity because the matter is confidential.

Despite Scholz still not moving to strike down the agreement, Germany vowed last month to impose a "robust trade policy" on Beijing, citing concerns of over-reliance on China and alleged human rights violations.

German Economy Minister Robert Habeck told reporters that any "naivety" in relations with China was "over".