Germany has taken a firm stance against Beijing by blocking a complete Chinese takeover of a satellite startup on national security grounds. The German government, led by Chancellor Olaf Scholz, is concerned about the heavy reliance of Europe’s largest economy on China and aims to reduce dependencies. The startup, KLEO Connect, plans to establish its own network of satellites in low Earth orbit to provide internet to remote locations, posing a potential rival to Starlink.

The strategic importance of space telecommunications has come to the forefront during the Ukraine war, where Starlink, owned by Elon Musk’s company SpaceX, has become a crucial tool for Kyiv. Shanghai Spacecom Satellite Technology (SSST) currently holds approximately 53% of KLEO Connect and sought to acquire an additional 45% from German company EightyLeo. However, the German government blocked SSST’s move after an investment review by the economy ministry concluded that it could threaten public security.

This case is part of a long struggle for control over the company, with the core issue revolving around frequency rights registered in Liechtenstein several years ago. Recent cases have highlighted Germany’s growing concerns about Chinese investments. Last year, the government prevented the sale of two chipmakers to Chinese investors due to security concerns. Additionally, the proposed sale of a stake in Hamburg port to a Chinese firm sparked a political dispute, but Chancellor Olaf Scholz ultimately approved a reduced-size acquisition.

Germany’s actions reflect its commitment to safeguarding national security and reducing reliance on Chinese investments. By blocking the Chinese takeover of the satellite startup, Germany aims to protect its strategic interests in space telecommunications and maintain control over critical infrastructure.