The German government is to prevent Chinese investors from purchasing the machine tool manufacturer Leifeld Metal Spinning, the business magazine Wirtschaftswoche reported on Thursday.

Citing sources within the German government, the weekly said the cabinet will make a final decision on August 1 following a month-long investigation by the economy ministry of the proposed takeover by Yantai Taihai Corporation.

The veto would be the first time Germany has prevented one of its firms being sold to Chinese investors, who have been actively acquiring US and European companies over the past five years.

Read more: German auto parts maker Grammer agrees to buyout offer from China's Ningbo

Leifeld, which is based in the city of Ahlen in western Germany, manufactures materials that are used in the auto, aerospace and nuclear industries. It has about 200 employees.

Neither the company nor the ministry would comment on the report. But a ministry spokesman told the Agence France-Presse news agency that it "can examine whether a purchase endangers public order or the security of the Federal Republic of Germany."

Beijing has caused much concern in the West after a wave of takeovers by Chinese firms, which have often led to the forced transfer of technology and production to China.

Amid concern that its most successful businesses could lose vital technical know-how, last year Germany modified rules to allow the government to examine a wider range of proposed tie-ups.

They include companies that provide "critical infrastructure," or those considered to be developing "key technologies."

Foreign investors who plan to buy at least 25 percent of a German firm can be investigated, and civil servants have been given more time to scrutinize deals.

Read more: China's unsatisfied hunger for German companies

A study by consultancy EY found Chinese companies bought 54 German firms last year and invested $13.7 billion (€11.8 billion) in Europe's largest economy.

Although the Leifeld tie-up would be Germany's first formal veto, in 2016, the sale of chip system manufacturer Aixtron to a Chinese firm collapsed after the US raised security concerns to Germany's defense ministry.

The economy ministry had initially approved the sale but then reversed its decision.

mm/tr (AFP, dpa)