With China and the US increasingly excluding each other from trade, European companies are faced with the choice of taking sides or splitting up. American measures are increasingly blocking companies from trading with China.
This is what the European Chamber of Commerce in China and MERICS, a think tank based in Berlin, stated in a report. European companies are trapped between the US, which bans parts and equipment from China, and China, which is increasingly taking it upon itself to develop its own products because of these blockades.
IT sectors hit the hardest
According to Joerg Wuttke, who is in charge of the European Chamber, the hits will mainly be felt in data flows, ICT equipment and digital goods, writes Reuters.
In the report, the two groups indicate that a negative impact is already being felt by almost half of the companies surveyed. Of these, 19 per cent have already cancelled or postponed new projects.
“As the world moves towards increasing techno-nationalism, the possibility of complete digital disintegration requires sober analysis”, the group writes in the report.
Choice between China and the rest of the world
The EU and China recently struck a deal to give European companies greater access to the Chinese market. Meanwhile, in the US a proposal called ‘Clean Network’ has been made. With this, the country wants to set up a digital global alliance, excluding technology that may have been manipulated by the Chinese government.
To deal with this situation, European companies are faced with splitting up into separate departments for China and the rest of the world or coming up with a more neutral architecture. Both of these are expensive steps to take.