BERLIN - The German government on Wednesday decided to block prospective Chinese investment in two domestic semiconductor producers, sources told Reuters, after the moves raised national security concerns.

The economy ministry had recommended to the Cabinet that the government block the Chinese takeover of Elmos Semiconductor’s chip factory, saying it would pose a threat to national security.

Berlin blocked the sale to Silex, a Swedish company that is a subsidiary of Chinese group Sai Microelectronics.

The government on Wednesday also decided to block a Chinese takeover of ERS Electronic, which is based in the southern state of Bavaria. ERS declined immediate comment and it was not immediately clear which Chinese company wanted to buy the firm.

“The Cabinet has decided on the two bans under the Foreign Trade Act,” one of the sources said.

The decisions come at a time of heightened sensitivity around relations between Berlin and Beijing.

The government of Chancellor Olaf Scholz, who visited China last week, is trying to balance a push for more access to the Chinese market for European companies while addressing security concerns and moving away from Germany’s economic reliance on China.

Mr Scholz has pushed through a decision to allow China to buy a minority stake in a terminal in Germany’s largest port despite opposition from within his coalition.

That decision had sparked an angry response by the foreign ministry, which warned that the investment disproportionately expanded China’s strategic influence. China has previously dismissed such concerns.

Mr Scholz has warned of any decoupling from China or de-globalisation in general, while also emphasising the need for Germany to diversify its Asia trade and take strategic concerns more into account in its business dealings. REUTERS