The German government has prohibited a Chinese firm, Shanghai Spacecom Satellite Technology, from acquiring a minority stake in satellite startup KLEO Connect. The cabinet supported the decision made by the economy ministry, which prevents Shanghai Spacecom from taking over the 45% minority stake of German company EightyLeo.

KLEO Connect aims to establish a network of more than 300 small, low earth orbit satellites by 2028, along with ground infrastructure, to provide global communication services. This is similar to SpaceX’s Starlink project. The emerging space sector is gaining strategic importance, particularly in light of recent discussions about the use of Starlink by the Ukrainian military in defense against Russia’s invasion. Elon Musk revealed that he had refused a Ukrainian request to activate Starlink in Crimea’s port city of Sevastopol last year, fearing complicity in a potential act of war.

Germany has been adopting a stricter stance on China over the past year, with Chancellor Olaf Scholz’s government emphasizing the need to reduce strategic dependencies on the Asian superpower. In November 2022, Berlin blocked Chinese investment in two semiconductor producers over national security concerns and the risk of sensitive technological know-how flowing to Beijing. However, in May 2023, the government allowed China’s state-owned shipping giant COSCO to partially acquire a Hamburg port-based container terminal, despite objections from various ministries. The United States and the European Commission had also voiced concerns about this deal.