U.S.–China technology decoupling and corporate default risk: Evidence from Chinese high-tech firms

U.S.–China technology decoupling has broadly affected the innovation and performance of Chinese high-tech firms, yet its implications for credit risk remain unexplored. In this paper, we combine bilateral patent citation data with a Bartik shift-share design to build a firm-level decoupling index that varies across both firms and time. Drawing on a sample of 1864 high-tech firms listed on China’s A-share market from 2009 to 2023, we show that firms more exposed to decoupling face significantly higher default probabilities. The finding holds under instrumental variable estimation and a range of sensitivity checks. We trace the effect to three channels: greater operating uncertainty, tighter financial constraints, and higher supply chain costs. Private firms, firms whose patents are concentrated in a few technology fields, ICT-sector firms, and firms lacking executives with overseas experience are disproportionately affected. The effect strengthens after the U.S.–China trade war began in 2018. Taken together, our results reveal a previously undocumented link between technology competition and firm-level financial fragility, offering new evidence relevant to credit risk assessment and financial regulation.