As Chinese manufacturing enterprises became more deeply integrated into global value chains, they faced increasingly restrictive U.S. export controls that limited their access to foreign technologies and critical intermediate inputs. Using firm-level data from Chinese listed manufacturing firms over 2006–2015 and the U.S. Entity List, this paper systematically examines the impact of export controls on China’s export technology complexity and explores the underlying mechanisms. The study shows that U.S. export controls significantly reduce manufacturing enterprises’ export technological complexity. The negative effect is more pronounced among enterprises in eastern China, state-owned enterprises, large enterprises, and enterprises operating in high-technology industries. Mechanism analysis shows that export controls suppress the growth of export technological complexity by increasing transaction costs and disrupting supply chains. Although the disruption of innovation chains may stimulate firms’ indigenous innovation, the overall effect of export controls remains negative. Our findings provide theoretical and practical insights for China’s strategies to respond to export controls, enhance the technology complexity of manufacturing exports, and strengthen its position in the global value chain.
Liu et al. (Tue,) studied this question.