Germany is seeking tighter control over foreign investment in European companies, in a sign of a growing protectionist reaction to China’s appetite for overseas acquisitions.

Economy Minister Sigmar Gabriel on Monday reopened a review of the takeover of Aixtron SE, which supplies equipment to the semiconductor industry, by China’s Grand Chip Investment GmbH. That follows calls by Gabriel, who is also Chancellor Angela Merkel’s deputy, for European Union measures to give national governments more powers to block or impose conditions on shareholdings of non-EU companies.

While Merkel hasn’t publicly backed her vice chancellor’s push, Gabriel’s proposal reflects growing backlash within her government to unfettered Chinese investment in Europe’s biggest economy following the purchase of German robot maker Kuka AG by China’s Midea Group Co. Gabriel has found an ally in EU Digital Economy Commissioner Guenther Oettinger, a Merkel appointee who’s a member of her party.

“It’s absolutely right to initiate this debate at the European level,” Oettinger said in an interview last week. “Everybody has to play by the same rules. Clearly, there are many countries, including big ones such as China, that make market access or corporate takeovers difficult or effectively impossible.”

Aixtron Surprised

In the Aixtron case, the company said Monday that the Economy Ministry had withdrawn a so-called clearance certificate issued on Sept. 8 for Fujian Grand Chip Investment Fund LP, an indirect shareholder of Grand Chip.

Aixtron wants to assist the bidder and authorities to alleviate possible concerns about the takeover, Guido Pickert, an Aixtron spokesman, said Monday by phone. “Like everyone else, we were surprised,” he said. The ministry declined to immediately comment when contacted by Bloomberg.

Grand Chip agreed in May to buy Aixtron in a deal valued at 670 million euros ($728 million). The purchase could help the company access the Chinese market and develop its product portfolio, after losing its largest customer last year.

Aixtron shares dropped as much as 8.3 percent to 5.32 euros and traded 6.2 percent lower as of 10:13 a.m. on Monday in Frankfurt. That pared the stock’s gain this year to 32 percent, giving the Germany company a market value of 613 million euros.

Gabriel Proposal

The initiative by Gabriel calls for allowing EU member states to step in if a non-EU investor seeks to acquire more than 25 percent of the voting rights in a company, according to a government document obtained by Bloomberg. Restrictions would potentially kick in if the home country restricts foreign investment or its government orders or funds the acquisition.

The proposal is being discussed within Merkel’s government, Economy Ministry spokesman Korbinian Wagner told reporters on Oct. 17. He declined to elaborate on its content. A chancellery spokesman declined to comment.

Gabriel heads Germany’s Social Democrats, the junior partner in Merkel’s governing coalition. With his party trailing her Christian Democrats in polls ahead of elections next year, he’s sounding warnings about Chinese encroachment on German industry and the risk of job losses. EU commissioner Oettinger’s support suggests cross-party backing.

Clear Position

“The EU has to take a clear position toward China,” Gabriel told a meeting of the Federation of German Industries lobby in Berlin this month. “We shouldn’t shy away.”

Chinese companies have announced or completed acquisitions of German companies worth a record 11.3 billion euros ($12.3 billion) this year, almost eight times the level of 2015, according to data compiled by Bloomberg.

That includes the purchase of Kuka by Midea, China’s biggest appliance maker, after Gabriel led a failed effort to find an alternative bid by a European suitor. In the latest potential Chinese bid, lighting maker Sanan Optoelectronics Co. Ltd. said it had held talks with Osram Licht AG on a possible acquisition of the almost century-old German company.

The Aixtron announcement could mark an “inflection point,” for German technology takeovers, said Malte Schaumann, an analyst with Warburg Research in Hamburg. “If the German government does finally not allow the acquisition, this should have negative implications for a sale of Osram to a Chinese buyer as well,” he said in an e-mailed note.

Gabriel will need allies among EU governments to build momentum for tightening safeguards against foreign investors. While the European Commission, the EU’s regulatory arm, is seeking to modernize its trade defenses, it isn’t working on such a proposal for now, according to a European official who asked not to be identified discussing private deliberations.

Existing rules generally allow governments to stop takeovers only if they threaten energy security, defense, media concentration or financial stability. Still, the EU has signaled a tougher stance toward Chinese government-owned companies, ruling this year in a nuclear-power deal that China General Nuclear Power Corp. couldn’t be viewed as independent from the Chinese state and other state-owned firms.