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Technology Sanction and Firm R&D: Evidence From the US-China Trade Dispute

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  • HAYAKAWA,Kazunobu
  • Yang,Chih-hai

Abstract

The United States has implemented export control regulations targeting China. Specifically, it has included numerous Chinese companies on the Entity List, which comprises parties of concern. Exporters of regulated items or technology to these listed firms must secure permission from the US government, with the possibility of denial. This study investigates how this technology sanction hinders the R&D activities of sanctioned Chinese firms. To achieve this, we apply the matching method to firm-level data from 2015 to 2022. Our findings indicate that technology sanctions do not increase the R&D investment and R&D intensity, even though the total assets of sanctioned firms decline. When we separate the listed firms based on the license review policy (i.e., the nearly strict review), we again observe insignificant effects on R&D investment in either category of sanctioned firms. Notably, less strictly sanctioned firms accumulated more inventories, whereas more strictly sanctioned firms received increased financial support from the government in response to the technology sanctions.

Suggested Citation

  • HAYAKAWA,Kazunobu & Yang,Chih-hai, 2025. "Technology Sanction and Firm R&D: Evidence From the US-China Trade Dispute," IDE Discussion Papers 950, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper950
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    References listed on IDEAS

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    More about this item

    Keywords

    US–China trade war|Technology sanction|Innovation;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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