The European Commission warned the German government last spring not to approve an investment by China's Cosco into Hamburg's port, German daily Handelsblatt reported on Friday, citing sources.
Shipping giant Cosco last year made a bid to take a 35% stake in one of three terminals in Germany's largest port in the northern city of Hamburg.
Germany's ruling coalition is divided over whether to approve the investment, government sources say, even as Beijing urges Berlin not to politicize the bid and the port authority warns this could hurt the economy.
According to Handelsblatt, the EU warned that sensitive information about the business could make it into Chinese hands if Germany allowed the investment.
The German government, which is still weighing whether to approve the deal, declined to comment on the report. A spokesperson for Olaf Scholz said the German chancellor had not yet agreed with the relevant ministers how to proceed.
The Commission has said it does comment on individual cases.
European Union leaders are due to discuss on Friday reducing their economic dependency on China, among other topics, when they meet for a second day of talks in Brussels.
(Reuters - Reporting by Markus Wacket; Writing by Maria Sheahan; editing by Matthias Williams)