Does the Sino–US Trade Friction Promote Firm Innovation? The Role of the Export Grab Effect

Abstract

We examine and explain changes of firm innovation following the Sino–US trade frictions. Specifically, we use the unique microdata of Chinese technology and innovation firms from 2016 to 2019 to identify the response of firm innovation to the shock of the Sino–US trade friction and investigate the changes in firm innovation before and after the outbreak of the Sino–US trade friction. We found that, on average, export firms significantly increased innovation after the Sino–US trade friction. In particular, firms in the advanced manufacturing industry perform significantly better than firms in other technical fields. To explain this phenomenon, we compare firms’ export performance in different technical fields and conduct a detailed mechanism test. It is found that the Sino–US trade friction has led to the export grab phenomenon in some technical fields, and the export grab effect is the reason for the significant increase in the innovation of export firms. The direct effect of export grab promotes the innovation of sustainable export firms, and the indirect effect of export grab leads to an increase in innovation by reducing the threshold of the export market. We verified the direct and indirect effects of export grab on firm innovation following the Sino–US trade frictions.

Does Technological Progress Promote or Prevent Trade Conflict? Evidence From China

“…Sun et al (2022) show that the uncertainty of the trade environment promotes green technological innovation, which is conducive to TP. Moreover, Xu et al (2022) find that the Sino-U.S. TC increases Chinese firms' innovative activities.…”

“…Most previous researchers investigate the impact of trade liberalisation on TP (Aghion et al, 2021;Coelli et al, 2022) or the influence of Sino-U.S. TC (Houser, 2020;Xu et al, 2022) while ignoring the impact of TP on TC. Although some research discusses the influence of TP on certain trade policies (e.g., anti-dumping) (Li & Li, 2022), it ignores the direct impact of TP on TC.…”

The Role of High-end Manufacturing in Sino US Trade Friction

“…Why is there such a contradiction? Xing Yuqing [3] an economics professor at the Japan University of policy studies and overseas Dean of the Global Value Chain Research Institute of the University of international business and economics, believes that such errors are related to outdated statistical methods. The World Bank's definition of value chain trade now focuses too much on the proportion of imported intermediate products used in export products, which misses some trade activities along the value chain.…”

The Investigation and Thinking of China-US Trade Friction: Taking Lu’an Import and Export Enterprises as an Example

“…The government should reduce taxes and relax loans to give enterprises more start-up capital and improve product quality. For small and medium-sized enterprises with low risk prevention and control ability and poor prevention and control foundation, export tax rebates and export credit insurance can be used to help enterprises reduce business risks and accelerate capital operation [19] .…”