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The Collateral Damage of US Export Control Regulations on Japanese Suppliers’ Exports to China

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  • Kazunobu HAYAKAWA
  • Keiko ITO

Abstract

This study empirically examines the impact on Japanese supplier firms’ exports to China of the US government’s tightening of export control regulations on China’s telecommunications equipment company, Huawei Technologies Co., Ltd. (hereinafter, Huawei). We identify Huawei’s major Japanese suppliers and apply the difference-in-differences method to firm-level data from 2016 to 2021. The results indicate that compared with other Japanese firms in the same industry, Huawei’s supplier firms reduced their exports to China in 2020, just after Huawei was added to the US Entity List in 2019. The negative effect was larger for Huawei suppliers’ exports to non-affiliated Chinese firms (i.e., exports in inter-firm transactions) than for their exports to affiliated firms in China (i.e., intra-firm exports). Suppliers that intensively engaged in research and development activities further reduced their exports by 2021. By contrast, while non-China-bound exports were not affected by the US regulations, Huawei suppliers significantly increased exports to their affiliates located in countries or regions outside China in 2021, suggesting a stronger inclination among Huawei’s Japanese suppliers toward less risky alternatives. Indeed, either an insignificant change or even a significant increase was found in the total sales of Huawei’s suppliers.

Suggested Citation

  • Kazunobu HAYAKAWA & Keiko ITO, 2025. "The Collateral Damage of US Export Control Regulations on Japanese Suppliers’ Exports to China," Discussion papers 25061, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25061
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