Assistance or resistance? A study of the impact of U.S. Entity List sanctions on the core technology capabilities of listed companies in China

The trade friction between China and the United States has an important impact on China's economic development. This paper takes listed companies belonging to the same industry as the companies included in the Entity List from 2010 to 2022 as the research sample, and empirically tests the impact of the U.S. Entity List on the core technology capabilities (CTC) of Chinese enterprises based on the difference-in-difference (DID) method. The results showed that the external shock of the U.S. Entity List significantly promoted the enhancement of CTC among Chinese firms. This effect is particularly salient among non-state-owned and tech-intensive firms and is further strengthened by digital transformation. Further mechanism analysis revealed that the impact was driven by increased R&D investment and improved investment value discovery. This study not only empirically investigates the mechanism through which the U.S. Entity List system affects CTC, but also demonstrates the role of this external shock in enhancing firms’ CTC. Additionally, it provides relevant policy and business strategy recommendations for further strengthening firms’ CTC and addressing the environmental uncertainties arising from international trade conflicts.