IDEAS home Printed from https://ideas.repec.org/a/bla/apacel/v39y2025i2p161-173.html

Does China's Technological Innovation Affect China–US Relation, or Vice Versa?

Author

Listed:
  • Kai‐Hua Wang
  • Li‐Li Liu
  • Hong‐Wen Liu
  • Lu Liu

Abstract

This study investigates the causal relationship between China's technological innovation (CTI) and China–US relation (CUR) using full‐sample and subsample Granger causality tests. This study revealed that CTI has both positive and negative effects on CUR. CTI has enhanced China's economic strength by promoting industrial upgrading and enhancing China's international status, which has had a complex impact on CUR. In contrast, CUR has a positive effect on CTI. The deterioration of CUR affects China's technological R&D, industrial chain supply and patent application, reducing the speed of China's innovation. In addition, the analysis determines the interaction results of two variables in multiple subperiods and verifies the channels of influence, which deepens the understanding of the relationship between them. China's improved technology will lead to higher prices for imports into the United States, which could hurt American consumers. In recent years, the United States has adopted a policy of ‘decoupling’ from China's economy, which has made CUR tense. US economic progress has been somewhat impacted by trade cooperation between China and the United States, which has been directly impacted by the conflict between the two nations. Facing complex international circumstances, the development of CTI and CUR should be coordinated. China and the United States should use a peaceful dialogue to resolve long‐term technological disputes. China's government should fully use multiple resources to support technological innovation.

Suggested Citation

  • Kai‐Hua Wang & Li‐Li Liu & Hong‐Wen Liu & Lu Liu, 2025. "Does China's Technological Innovation Affect China–US Relation, or Vice Versa?," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 39(2), pages 161-173, November.
    • Handle: RePEc:bla:apacel:v:39:y:2025:i:2:p:161-173
    DOI: 10.1111/apel.12454
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/apel.12454
    Download Restriction: no
    File URL: https://libkey.io/10.1111/apel.12454?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Shenxiang Xie & Mingxin Zhang & Shenglong Liu, 2020. "The Impact of Antidumping on the R&D of Export Firms: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(9), pages 1897-1924, July.
    2. Wang, Xiaojuan & Shi, Benye, 2022. "Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains," Finance Research Letters, Elsevier, vol. 46(PA).
    3. Chad Bown, 2020. "How the United States Marched the Semiconductor Industry into Its Trade War with China," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(4), pages 349-388.
    4. Cai, Yifei & Mignon, Valérie & Saadaoui, Jamel, 2022. "Not all political relation shocks are alike: Assessing the impacts of US–China tensions on the oil market," Energy Economics, Elsevier, vol. 114(C).
    5. Cui, Xin & Wang, Chunfeng & Liao, Jing & Fang, Zhenming & Cheng, Feiyang, 2021. "Economic policy uncertainty exposure and corporate innovation investment: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    6. Seru, Amit, 2014. "Firm boundaries matter: Evidence from conglomerates and R&D activity," Journal of Financial Economics, Elsevier, vol. 111(2), pages 381-405.
    7. Jun Zhang & Shuo Shi, 2020. "The US Unanticipated Costs of Decoupling from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(6), pages 1-27, November.
    8. Chin, Tachia & Wang, Wannan & Yang, Meng & Duan, Yunlong & Chen, Yantai, 2021. "The moderating effect of managerial discretion on blockchain technology and the firms’ innovation quality: Evidence from Chinese manufacturing firms," International Journal of Production Economics, Elsevier, vol. 240(C).
    9. You, Shuyang & Zhou, Kevin Zheng & Jia, Liangding, 2021. "How does human capital foster product innovation? The contingent roles of industry cluster features," Journal of Business Research, Elsevier, vol. 130(C), pages 335-347.
    10. Andrews, Donald W K & Ploberger, Werner, 1994. "Optimal Tests When a Nuisance Parameter Is Present Only under the Alternative," Econometrica, Econometric Society, vol. 62(6), pages 1383-1414, November.
    11. Brandt, Loren & Morrow, Peter M., 2017. "Tariffs and the organization of trade in China," Journal of International Economics, Elsevier, vol. 104(C), pages 85-103.
    12. He, Feng & Ma, Yaming & Zhang, Xiaojie, 2020. "How does economic policy uncertainty affect corporate Innovation?–Evidence from China listed companies," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 225-239.
    13. Jostein Hauge, 2020. "Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan," The World Economy, Wiley Blackwell, vol. 43(8), pages 2070-2092, August.
    14. Wang, Pengfei & Li, Xiao & Shen, Dehua & Zhang, Wei, 2020. "How does economic policy uncertainty affect the bitcoin market?," Research in International Business and Finance, Elsevier, vol. 53(C).
    15. Shenxiang Xie & Mingxin Zhang & Shenglong Liu, 2020. "The Impact of Antidumping on the R&D of Export Firms: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(9), pages 1897-1924, July.
    16. Guan, Jialin & Xu, Huijuan & Huo, Da & Hua, Yechun & Wang, Yunfeng, 2021. "Economic policy uncertainty and corporate innovation: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    17. Sohag, Kazi & Begum, Rawshan Ara & Abdullah, Sharifah Mastura Syed & Jaafar, Mokhtar, 2015. "Dynamics of energy use, technological innovation, economic growth and trade openness in Malaysia," Energy, Elsevier, vol. 90(P2), pages 1497-1507.
    18. Tang, Chunhui & Tang, Yaojia & Su, Shengwei, 2019. "R&D internationalization, product diversification and international performance for emerging market enterprises: An empirical study on Chinese enterprises," European Management Journal, Elsevier, vol. 37(4), pages 529-539.
    19. Wu, Howei & Lin, Jia & Wu, Ho-Mou, 2022. "Investigating the real effect of China’s patent surge: New evidence from firm-level patent quality data," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 422-442.
    20. Wang, Kai-Hua & Zhao, Yan-Xin & Su, Yun Hsuan & Lobonţ, Oana-Ramona, 2023. "Energy security and CO2 emissions: New evidence from time-varying and quantile-varying aspects," Energy, Elsevier, vol. 273(C).
    21. Gu, Xin & Zhang, Weiqiang & Cheng, Sang, 2021. "How do investors in Chinese stock market react to external uncertainty? An event study to the Sino-US disputes," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    22. Chi-Wei Su & Yu Song & Ran Tao & Lin-Na Hao, 2020. "Does political conflict affect bilateral trade or vice versa? Evidence from Sino-U.S. relations," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 33(1), pages 3238-3257, January.
    23. Chunjuan Luan & Chunyan Zhou & Aiyun Liu, 2010. "Patent strategy in Chinese universities: a comparative perspective," Scientometrics, Springer;Akadémiai Kiadó, vol. 84(1), pages 53-63, July.
    24. Liu, Qing & Lu, Ruosi & Lu, Yi & Luong, Tuan Anh, 2021. "Import competition and firm innovation: Evidence from China," Journal of Development Economics, Elsevier, vol. 151(C).
    25. Mehmet Balcilar & Zeynel Ozdemir, 2013. "The export-output growth nexus in Japan: a bootstrap rolling window approach," Empirical Economics, Springer, vol. 44(2), pages 639-660, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhou, Lei & Wei, Ji, 2025. "Intellectual property protection and industrial chain security under the background of technology blockades: Analysis of the moderating effect based on dynamic capabilities theory," Finance Research Letters, Elsevier, vol. 86(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chada, Swechha, 2023. "Economic policy uncertainties and institutional ownership in India," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    2. Tzu-Pu Chang & Gunadi Laksono, 2026. "Innovating Through Uncertainty: How Firms Buffer Geopolitical Risk to Sustain Financial Performance," Bulletin of Applied Economics, Risk Market Journals, vol. 13(1), pages 27-46.
    3. Cui, Xin & Wang, Chunfeng & Sensoy, Ahmet & Liao, Jing & Xie, Xiaochen, 2023. "Economic policy uncertainty and green innovation: Evidence from China," Economic Modelling, Elsevier, vol. 118(C).
    4. Jia, Shaoqing & Yang, Liuyong & Zhou, Fangzhao, 2022. "Geopolitical risk and corporate innovation: Evidence from China," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    5. Sun, Yuliang & Han, Mingfeng, 2025. "Does globalized R&D promote corporate innovation?," Finance Research Letters, Elsevier, vol. 81(C).
    6. Maxwell Chukwudi Udeagha & Edwin Muchapondwa, 2023. "Environmental sustainability in South Africa: Understanding the criticality of economic policy uncertainty, fiscal decentralization, and green innovation," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1638-1651, June.
    7. Huanyu Ma & Xuegang Sun, 2025. "The impact of economic policy uncertainty on earnings value relevance," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 2427-2449, July.
    8. Mo Chen & Xuhua Hu & Jijian Zhang & Zhe Xu & Guang Yang & Zenan Sun, 2023. "Are Firms More Willing to Seek Green Technology Innovation in the Context of Economic Policy Uncertainty? —Evidence from China," Sustainability, MDPI, vol. 15(19), pages 1-24, September.
    9. Weifeng Xu & Chang Liu, 2024. "External environment uncertainty, key resources acquisition, and corporate technological innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(1), pages 4-18, January.
    10. Wan, Enze & Li, Zhezhou & Zhao, Liang & Zhang, Xiangjian, 2024. "Economic policy uncertainty and Chinese companies' overseas investment," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    11. Wei, Xing & Wang, Yuxin, 2025. "Exploration of the impact of macroeconomic uncertainty on corporate value and investment behavior," Finance Research Letters, Elsevier, vol. 77(C).
    12. Wen, Huwei & Lee, Chien-Chiang & Zhou, Fengxiu, 2022. "How does fiscal policy uncertainty affect corporate innovation investment? Evidence from China's new energy industry," Energy Economics, Elsevier, vol. 105(C).
    13. Ye, Jiangfeng & Wan, Qunchao & Li, Ruida & Yao, Zhu & Huang, Dujuan, 2022. "How do R&D agglomeration and economic policy uncertainty affect the innovative performance of Chinese high-tech industry?," Technology in Society, Elsevier, vol. 69(C).
    14. Huang, Ziyin & Guo, Zhuopin & Chen, Junsong & Huang, Jin, 2025. "Sharing weal and woe: Do geopolitical risks affect corporate innovation? A global supply chain perspective," International Review of Financial Analysis, Elsevier, vol. 106(C).
    15. Guangchen Li & Qianlong Ma & Subuhi Khan & Khaoula Aliani, 2023. "Economic policy uncertainty: A new firm‐level measurement and impact on enterprise innovation strategies," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(8), pages 4671-4685, December.
    16. Sun, Yanpeng & Song, Yuru & Long, Chi & Qin, Meng & Lobonţ, Oana-Ramona, 2023. "How to improve global environmental governance? Lessons learned from climate risk and climate policy uncertainty," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1666-1676.
    17. Wang, Man & Wang, Xueting, 2025. "Geopolitical risk and corporate maturity mismatch," Journal of Financial Stability, Elsevier, vol. 78(C).
    18. Narayan Sethi & Saileja Mohanty & Sanhita Sucharita & Nanthakumar Loganathan, 2020. "Tax Reform And Economic Growth Nexus In India: Evidence From The Cointegration And Rolling-Window Causality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(06), pages 1699-1725, December.
    19. KHURSHID, Adnan & KEDONG, Yin & CĂLIN, Adrian Cantemir & POPOVICI, Oana Cristina, 2017. "A Note On The Relationship Linking Remittances And Financial Development In Pakistan," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 21(4), pages 6-26.
    20. Wang, Xinghua & Lee, Zhengzheng & Wu, Shuang & Qin, Meng, 2023. "Exploring the vital role of geopolitics in the oil market: The case of Russia," Resources Policy, Elsevier, vol. 85(PB).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:apacel:v:39:y:2025:i:2:p:161-173. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://onlinelibrary.wiley.com/journal/14678411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.