Journal Article: "Is Trade Policy Uncertainty Pushing Chinese Enterprises to Innovate"

Title: Is Trade Policy Uncertainty Pushing Chinese Enterprises to Innovate

Authors: Kun Lang, Xincheng Li

Language: Chinese

Publication: Journal of International Trade, Vol. 1, No. 493, January 2024, 1002-4670: 87-104.

English Abstract: 

In recent years, under the background of geopolitical conflicts, trade policy uncertainty has increased significantly, which has profoundly affected the innovative behavior of enterprises. This article uses the data of Chinese A-share non-financial listed companies from 2000 to 2022, and empirically tests the impact of trade policy uncertainty on Chinese corporate innovation, which measured by enterprise independent innovation strategy and R&D investment. The results show that, on the one hand, trade policy uncertainty significantly increases the probability of enterprises adopting indigenous innovation strategies. The improvement effect is more pronounced for enterprises with large scale, high level of R&D investment, strong profitability, low market valuation and low leverage ratio. On the other hand, after the China-US trade friction, the increase in R&D investment of high-tech enterprises is significantly higher than that of non-high-tech enterprises. High-tech enterprises with better R&D foundation, less financing constraints, and executive team with R&D work experience are more likely to increase their R&D investment.