The Impact of U.S. Entity List on Enterprise Innovation in China
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Abstract
We examine the impact of the U.S. export control policies, particularly the Entity List, on the innovation behavior of Chinese enterprises. The Entity List is a crucial tool for the U.S. to restrict the export of high-tech products to certain Chinese companies. Using a staggered Difference-in-Differences (DID) model and data from A-share listed companies in China from 2017 to 2022, we find that being added to the Entity List significantly boosts patent applications and R&D input among targeted Chinese firms. This positive effect is concentrated in firms facing more intense market competition and higher production factor costs, suggesting that the export control policy could stimulate innovation by raising competition and costs.
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