2024 European Winter Meeting, Palma de Majorca, Spain: December, 2024
Technological Decoupling? The Impact on Innovation of US Restrictions on Chinese Firms
Yu Cao, Francesca de Nicola, Aaditya Mattoo, Jonathan Timmis,
Recent U.S.-China tensions have raised the specter of technological decoupling. This paper examines the impact of U.S. export restrictions and technology licensing on Chinese firms’ innovation. It finds that U.S. sanctions reduce the quantity and quality of patent outputs of targeted Chinese firms, primarily due to decreased collaboration with U.S. inventors. However, firms with strong preexisting innovation capacities—such as a higher initial patent stock or those in sectors closer to the U.S. technology frontier—experience less severe reductions in patent output. Sanctions in specific technology fields lead to a decline in the patent output of both Chinese firms with U.S. collaborators and U.S. firms with Chinese collaborators
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