Robotic arms manufactured by Kuka AG operate on a Volkswagen Passat saloon chassis on the automated welding production line inside the VW factory in Emden, Germany. (Photographer: Krisztian Bocsi/Bloomberg)

German Spy Chief Says China’s Tech Takeovers Are a Security Risk

(Bloomberg) -- Chancellor Angela Merkel’s top counterintelligence official said Chinese acquisitions of high-tech companies in Germany represent a potential national-security threat.

The head of Germany’s top domestic intelligence agency, Hans-Georg Maassen, highlighted the issue in an annual report on security risks that included cyber attacks from China and Russia as well as a rise in threats from Islamist, far-right and far-left fringe groups.

The report painted a picture of Chinese government influence through state companies that had the potential to jeopardize German economic and security interests by siphoning of technological know-how. Conventional cyber attacks on companies have ebbed in recent years and given way to targeted takeovers, Maassen said.

“We certainly do have to be concerned with this if we have the impression that behind the potential buyer lies a foreign state with interests that go far beyond the acquisitions,” Maassen told reporters on Tuesday in Berlin.

Merkel’s government is at the forefront of moves to bring in European Union-wide screening of outside investments after being the target of Chinese acquisitions in recent years. Among the most notable have been the 2016 purchase of robot maker Kuka AG by Midea Group Co., the halted takeover of semiconductor-equipment maker Aixtron SE and the State Grid Corporation of China’s bid for a 20 percent stake in 50Hertz Transmission GmbH.

In the auto industry, Chinese billionaire Li Shufu surprised many in Germany this year when he became the biggest single shareholder in Mercedes-Benz parent Daimler AG after accumulating a 9.7 percent stake through complex derivative transactions.

Germany’s report on security risks, which was introduced by Maassen and Interior Minister Horst Seehofer, attributed Chinese takeover activity to an effort to close a competitive gap with foreign market actors as domestic demand in China recedes.

It added that Chinese intelligence agencies have shifted toward political espionage, especially to gather information in EU institutions and Group of 20 meetings to gauge views of China.

©2018 Bloomberg L.P.