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Things are getting political these days when it comes to technology, and not just when Twitter bans Donald Trump's user account.

The same thing happened to the EU officials who negotiated the EU-China investment agreement at the end of last year.

They were only able to end the negotiations shortly before the turn of the year - and they had to clear a politically extremely delicate hurdle out of the way.

In one of the last drafts of the contract text, which Beijing sent to Brussels at the beginning of December, there was apparently a passage that the negotiators of the EU Commission were not prepared for.

He intended to punish those EU countries that block their latest generation of 5G cellular networks for equipment from the Chinese provider Huawei, wrote the "South China Morning Post", which has this draft contract.

For the EU states concerned, which block Huawei and other Chinese telecom equipment suppliers from accessing the 5G market, part of the Chinese contract commitments would have been blocked.

The EU negotiators apparently did not agree to this.

However, the episode illustrates how increasing tech nationalism is changing world politics.

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Europe wants to be at the forefront.

In December, EU Industry Commissioner Thierry Breton and Vice-Commission President Margrethe Vestager presented their plans for comprehensive digital regulation.

Brussels’s claim: The new rules for digital companies and markets should become a blueprint for tech regulation around the globe.

No more and no less.

The reality is currently different.

The episode from the EU-China negotiations clearly shows that China and the USA in particular are currently in the process of negotiating the digital sphere among themselves.

As in the case of Huawei, the EU must be careful not to get ripped apart between the two tech great powers.

China and the USA are increasingly pursuing a tech nationalism that could harm European companies in the long term.

The Chamber of Commerce of the European Union in China, which represents European companies that do business locally, is now warning of this.

Technologies are shared between China and the US

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Together with the renowned China research institute Merics, she analyzed what the increasing economic unbundling of China and the rest of the world means for European companies.

The result: In the digital industries in particular, there is a threat of considerable upheaval.

"The technologies that will shape our societies and economies and that play an increasingly important role in all areas of the economy will be divided between two of the three largest economic areas in the world," write the authors of the report.

China and the USA largely agreed on the development of future technologies and their application.

In fact, the technology world is rapidly deglobalizing.

China and the USA are disentangling their technology sectors, isolating them increasingly from each other.

The USA, for example, is banning Huawei and other Chinese suppliers from the latest generation of cellular networks and is looking for allies around the world to exclude Chinese suppliers from other networks and technologies.

Source: WORLD infographic

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China has been relying on domestic tech companies for a long time.

The internet there is largely independent of the rest of the world.

Chinese consumers, for example, hardly or not at all use the services of the major US providers Google or Facebook.

"The US is moving into a world in which Chinese technology is to be wiped out of the supply chains, while China is creating state-sponsored national champions that dominate a largely independent ecosystem of domestic technology," the analysts write.

This is becoming a dilemma for European companies.

Their value chains are global and require inputs from both the US and China.

But in a world where these two big markets lock out each other's technology, companies doing business with both sides get a problem.

In this world of increasing tech isolation, European companies have only two options if they want to continue doing business in both markets.

On the one hand, you can offer products that specifically target the two markets.

However, this is far more complex in the digital sector than in conventional industries.

If you wanted to sell cars in Great Britain, you had to build the cockpit upside down.

Compared to the digital, this is still simple.

Research and development and the logistics chains must be set up for each of the two markets.

Thats expensive.

A second option would be to build hardware and software modularly: All those parts that can be used in both markets, for example because they come from Europe, could be developed and built for all customers, and only those parts that are critical could built specifically for the respective markets and exchanged depending on the customer.

From the company's point of view, this is also expensive.

European companies could end up as losers

In digital globalization, European companies are also threatening to become the big losers.

"Every step towards more economic decoupling causes further damage to companies", write the authors of the report.

And they warn that affected companies must think this development through to the end.

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"Techno-nationalism is increasing worldwide, and therefore one has to analyze what the possibility of a complete separation of the digital spheres would mean," they write.

In a survey by the Chamber of Commerce, some companies - especially those for whom China only accounts for a small part of international sales - stated that the digital unbundling would ultimately endanger their business in China.

Because economies of scale would not apply if they had to develop and produce separately for their Chinese customers, the China business would no longer be profitable, so they would have to give it up completely.

Others with higher market share in China said they needed to restructure their businesses.

In both cases, this means less investment, fewer jobs and, for end customers, higher costs and less choice, according to the report.

Apparently, even the experts do not see any other way out of the dilemma.