Trading Quality for Quantity? Export Control and Innovation Dilemma: Evidence from Chinese Listed Manufacturing Firms

The recent rise of trade protectionism has complicated the relationship between trade and innovation in some countries. This paper evaluates the impact of U.S. export control on the innovation performance of Chinese manufacturing listed firms. Based on firm-level invention patent data from 2015 to 2023, we find that firms subject to export control substantially expand their patent application activities. However, the quantitative expansion coincides with a deterioration in patent quality, as evidenced by the fast-track granted rate. Further analysis suggests that the divergence between firms’ internal innovation preferences, as reflected in management’s innovation awareness, knowledge width and technological trajectory, and their external R&D investment, underlies the innovation quantity–quality tension. Moreover, the decline in innovation quality is primarily concentrated in technological fields not favored by Chinese industrial policy and among state-owned enterprises, suggesting strategic balancing of innovation decisions in response to government intervention. This study provides further insights into the comprehensive impact of trade shock on innovation and contributes to the literature on the potential technological externalities of the U.S.–China trade conflict.