Germany's coalition government has allowed a Chinese company to buy a reduced stake in a Hamburg port terminal, AFP reports.

Under a compromise agreed to by Scholz's cabinet, Chinese shipping giant Cosco has been given the go-ahead to buy a stake of "below 25 percent" in the HHLA-owned Tollerort container terminal, the economy ministry said in a statement. "The reason for the partial prohibition is the existence of a threat to public order and safety," the ministry said.

China's state-owned Cosco originally wanted a 35 percent stake, and the deal would have been automatic had a compromise not been reached this week.

The breakthrough came on the eve of Scholz's visit to China. Scholz, the former mayor of Hamburg, supported the Cosco deal and repeatedly stressed the importance of strong trade ties between China and Europe's largest economy.

But six ministries wanted to veto the sale, including the ministries of defense, economy and foreign affairs over fears of critical infrastructure falling into foreign hands.

During the conflict, Scholz clashed with his coalition partners, who said lessons had to be learned from Germany's breakdown of relations with Russia.

Beijing welcomed Berlin's decision. "Cooperation is mutually beneficial. We hope the relevant parties will view pragmatic cooperation between China and Germany rationally and stop baselessly hyping it up," said Chinese Foreign Ministry spokesman Wang Wenbin.

Meanwhile, Scholz is convinced that the smaller stake offered by Cosco does not create strategic dependence, German government spokeswoman Christiane Hoffmann told reporters.

The agreement to settle for a reduced stake of 24.9 percent, which deprives Cosco of voting rights, reduces the acquisition to a purely financial participation, the economy ministry said in a statement.

For its part, German port logistics company HHLA said Cosco's participation would help preserve jobs at the port of Hamburg and strengthen its role as a key trade "hub" with Asia.

But the face-saving compromise has not silenced critics.

Anton Hofreiter, a member of the Green Party and chairman of the German parliament's European affairs committee, said that approving the deal was the wrong decision. Scholz's argument that this is a purely commercial project is fatally reminiscent of statements about Russia and Nord Stream (gas pipelines), he said.

Franziska Brandmann, leader of the youth wing of the FDP, accused the government of being naive.

Conservative opposition leader Friedrich Merz said Germany needs to reassess its relationship with China, noting that the Asian giant is becoming more repressive at home and increasingly aggressive abroad.

China is a key trading partner for Germany, especially for its flagship automobile industry.