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From Markups to Competitive Optimization: The Dual Role of Science and Technology Policies in Innovation

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  • Xinfang Xia

Abstract

This study, set against the backdrop of the implementation of China’s national science and technology policies, evaluates the impact of Made in China 2025 on the innovation dynamism of the semiconductor and robotics industries. Utilizing a Difference-in-Differences (DID) model and a Synthetic Difference-in-Differences (SDID) model, combined with panel data spanning 2010 to 2022, the research analyzes the changes in firms’ innovation capabilities following the policy implementation and explores the underlying mechanisms. The findings reveal that science and technology policies significantly enhanced innovation vitality in the semiconductor and robotics sectors, particularly in regions with higher levels of financial development and regional innovation. Moreover, the policies bolstered firms’ market competitiveness by increasing markup rates and optimizing competitive market environments, thereby fostering the development of an innovation ecosystem. The study further proposes policy optimization recommendations, including strengthening regional innovation ecosystems, optimizing resource allocation, and maintaining consistent policy support. It also suggests that future research could expand to other high-tech industries and adopt an international comparative perspective, providing more empirical evidence for policy formulation.

Suggested Citation

  • Xinfang Xia, 2026. "From Markups to Competitive Optimization: The Dual Role of Science and Technology Policies in Innovation," Chinese Economy, Taylor & Francis Journals, vol. 59(4), pages 289-318, July.
    • Handle: RePEc:mes:chinec:v:59:y:2026:i:4:p:289-318
    DOI: 10.1080/10971475.2025.2588893
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