The German government has prohibited the complete takeover of satellite startup KLEO Connect by Chinese company Shanghai Spacecom Satellite Technology, according to government sources. The decision was made by the economy ministry, which stated that Shanghai Spacecom, which already holds a 53% stake in the company, cannot acquire the remaining 45% minority stake held by German company EightyLeo.

KLEO Connect aims to establish a global communications network consisting of over 300 small, low earth orbit satellites. The network is set to be fully operational by 2028, along with the necessary ground infrastructure. This move mirrors the ambitions of SpaceX and its Starlink project.

The emerging space sector has gained strategic importance, particularly in light of recent discussions surrounding the Ukrainian military’s potential use of Starlink in defense against Russia’s invasion. Elon Musk, CEO of SpaceX, recently revealed that he had rejected a Ukrainian request to activate Starlink in Crimea’s port city of Sevastopol last year, as he feared involvement in a major act of war.

Germany has been adopting a tougher stance on China, with Chancellor Olaf Scholz’s government emphasizing the need to reduce strategic dependencies on the Asian superpower. Last November, Germany blocked Chinese investment in two semiconductor producers due to concerns over national security and the potential transfer of sensitive technological know-how to Beijing.

However, in May, the German government approved China’s state-owned shipping giant COSCO’s acquisition of part of a container terminal in Hamburg, despite objections from various ministries. Reports suggest that both the United States and the European Commission had warned against this deal, which was under consideration for an extended period.

It is clear that the German government is taking a more cautious approach to Chinese investments, considering both strategic concerns and potential security risks.