Mapping U.S.-China Technology Decoupling: Policies, Innovation, and Firm Performance

We develop measures of technology decoupling and dependence between the United States and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China’s dependence on the United States increased (decreased) during the first (second) decade. Firms covered by China’s Strategic Emerging Industries policies became less decoupled with the United States, gained cash flows, and gained valuation, but they saw no improvement in either innovation output/quality or productivity. Post-U.S. sanctions, firms in sanctioned sectors and their downstream suffered in performance but also became less decoupled with the United States. However, firms in the upstream of the sanctioned sectors improved productivity and produced more high-quality innovations.

Keywords: Technology Decoupling, Innovation, R&D, Patent, Firm Performance

JEL Classification: O31, O33, F02, O25

Suggested Citation: Suggested Citation

Han, Pengfei and Jiang, Wei and Mei, Danqing, Mapping U.S.-China Technology Decoupling: Policies, Innovation, and Firm Performance (December 2, 2020). Management Science Forthcoming, Columbia Business School Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3779452 or http://dx.doi.org/10.2139/ssrn.3779452