Germany has blocked a complete Chinese takeover of a satellite startup on national security grounds. The German tech company KLEO Connect was targeted by Shanghai Spacecom Satellite Technology (SSST), which already holds about 53 percent of KLEO Connect. SSST wanted to acquire an additional 45 percent from German firm EightyLeo, but this move was blocked by the German government.

The decision comes as Germany aims to reduce its reliance on China and de-risk its economy. Concerned about the heavy dependence of Europe’s top economy on China, the German government is taking a harder stance against Beijing. This move reflects the growing trend of countries reevaluating their strategic alliances and dependencies.

KLEO Connect aims to establish its own network of satellites in low Earth orbit, providing internet access to remote locations and competing with Starlink, operated by Elon Musk-owned company SpaceX. The strategic importance of space telecommunications has become apparent during the Ukraine war, where satellite networks have played a crucial role.

The German government conducted an investment review that concluded that the acquisition of KLEO Connect by SSST could pose a risk to public security. The decision to block the takeover highlights the growing concerns over Chinese investments in Germany.

In recent years, Germany has blocked several Chinese investments due to security concerns. Last year, the sale of two chipmakers to Chinese investors was blocked, and the proposed sale of a stake in Hamburg port sparked a political controversy. While Chancellor Olaf Scholz ultimately approved the acquisition, it was done at a reduced size.

These actions reflect Germany’s efforts to safeguard its national security interests and reduce its economic reliance on China.