German machine tool manufacturer Leifeld yesterday said Chinese investors had dropped their bid to purchase the strategic company to avoid a veto from the German government, reports AFP from Frankfurt Am Main.

“I can confirm that the interested party has withdraw its request for clearance from the economy ministry,” a Leifeld spokeswoman told the news agency, confirming media reports.

The move came just hours before the German government was set to announce whether or not it would block the sale, amid growing unease about Chinese firms buying up German know-how and sensitive technology.

A source close the economy ministry told the news agency the government was indeed planning to use its veto powers to stop China’s Yantai Taihai Corporation from getting its hands on Leifeld Metal Spinning for security reasons.

But the withdrawal of the Chinese bid means the government’s intervention “is no longer necessary”, the source added.