Analyzes how R&D influences firm resilience under geopolitical risk in China's renewable energy sector, implying interconnected policy needs.
China’s renewable energy sector sits at the heart of a deepening contest between techno-nationalist rivals. Whether R&D investment shields firms from the resulting disruption or heightens their vulnerability remains an open question. Using quarterly panel data from China’s new energy index constituents over 2016 to 2025, this paper allows the marginal effect of R&D on firm resilience to vary continuously with geopolitical risk. R&D intensity is positively associated with future return on assets (ROA) and return on equity (ROE) across specifications. Its relationship with resilience, however, proves conditional. Innovative firms hold a stability advantage when conditions are calm, but that advantage reverses during elevated tension, with R&D-intensive firms experiencing larger drawdowns and heightened tail risk. State-owned enterprises (SOEs) bear a far steeper market penalty than private firms when geopolitical risk spikes, consistent with their greater international visibility. These patterns suggest a technological exposure mechanism in which the cross-border linkages that sustain innovative capability become transmission channels for geopolitical shocks. The evidence implies that policies promoting R&D and those managing geopolitical exposure cannot be designed in isolation.
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Yan Liang (2026) studied this question.
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