The German government has given final approval to a controversial deal that will see the Chinese shipping company COSCO take a minority stake in a container terminal at Hamburg port.

Last month it was announced that Chancellor Olaf Scholz's three-party coalition government was revisiting a decision made in October 2022 to give the go-ahead to the deal. The review came when it emerged that the Tollerort container terminal had been classified as critical German infrastructure earlier in 2023 by Germany's national cyber security agency, the BSI.

However, on Wednesday, chief government spokesperson Steffen Hebestreit said the government was sticking to the October decision, which caps COSCO's stake in the Tollerort terminal at 24.99%. That compromise had been reached following intense opposition to the deal from the Greens and the Free Democrats (FDP), coalition partners of Scholz's Social Democrats (SPD).

The Tollerort terminal is owned by the Hamburg port logistics company HHLA. The company says the deal will make Hamburg port a preferred destination for COSCO and help secure jobs. It also said the agreement would strengthen Hamburg's national and international importance as a logistics location.

Close to one-third of the goods handled at the port already come from or go to China. China has been Germany's biggest trade partner for the past seven years, with the value of trade between the countries rising to a record €298 billion ($320 billion) in 2022.

That's despite a heightened political debate in Germany over the extent to which Berlin is dependent on its economic relationship with Beijing.

Government tensions on the issue

In recent years, Germany has sought to limit Chinese investment in the country. The COSCO deal inflamed that debate, with several government ministries connected to the Greens and the Free Democrats demanding last October that the company's stake be capped so it could not have outright control.

Critics have argued that allowing the deal to proceed creates a major security issue as it gives the Chinese government undue influence in the port terminal. COSCO already holds stakes in many other European ports.

Scholz's party was especially keen on pushing the deal through. However, there remains tension on the issue within the government. The Economy Ministry, led by the Greens' Robert Habeck, released a statement after the deal was confirmed on Wednesday, saying, "There were different assessments when assessing the acquisition of a holding."

Edited by: Sean Sinico