US-sanctioned Chinese companies are increasingly turning to open-source research to innovate and reverse-engineer restricted foreign technology, with a 72 per cent surge in scientific literature citations in their patent applications, according to a new study.
While the United States said it expanded its Entity List to safeguard national security and preserve its technological edge, an analysis of Chinese patent filings over the 12 years until 2022 showed that US restrictions on access to technology had driven Chinese firms to widely source publicly available scientific knowledge and conduct more of their own research.
“Our analysis reveals that US trade sanctions, such as the Entity List, have generated consequences that US policymakers may not have fully anticipated,” the researchers wrote in a policy article published in the peer-reviewed journal Science on Friday.
“Though hindering the targeted firms’ short-term operations, sanctions may also catalyse these firms’ development of internal capabilities and drive strategic shifts, potentially leading to the emergence of separate technological systems that compete with, rather than integrate into, the current global innovation ecosystem,” they wrote.
“This strategic adaptation by Chinese firms under external constraints unfolds against the background of rising corporate science in China, where firms have been deepening their integration with science, as evidenced by the rising number of science-linked patents and scientific publications.”
“Although the list limits access to US-origin proprietary technologies, sanctioned Chinese firms do not stop sourcing US-produced science,” the authors said. Following sanctioning, targeted companies added nearly 0.99 patents citing domestic science, 0.27 citing non-US foreign science and 0.2 citing US science.
To examine how trade controls alter corporate strategy, researchers from Shenzhen University, Tsinghua University and the University of Hong Kong analysed a firm-level data set of Chinese patents filed domestically and internationally between 2010 and 2022.
They found that Chinese companies were more engaged with science, both as consumers who increasingly cited scientific publications in their patents and as producers who generated a growing volume of academic publications.
Study author Wang Yanbo, associate director of the Centre for Innovation and Entrepreneurship at HKU Business School, said US trade restrictions were inadvertently accelerating technological self-reliance in China.
“Once they get blocked from this US-dominated global innovation system, they have to reinvent the wheel,” Wang said.
In addition to reverse engineering, “underneath every technology there are certain scientific principles. What is the best way to look into the scientific principle? You read academic papers.
“This is why these Chinese firms are extremely motivated to search the scientific literature, incorporate the knowledge into innovation and even to produce scientific knowledge by themselves,” he said.
“As long as you make a sufficient amount of effort and have some luck, you are going to invent something similar, something that you can use to substitute the US technology.
“Essentially what the US has been doing is forcing China to become independent and develop a separate technological system.”
The findings showed that among targeted firms, placement on the US Entity List induced an average 72 per cent surge in science-linked patents that cited academic literature.
While Chinese firms’ science-linked patents grew 13.4-fold compared to a 1.3-fold increase for US peers, Chinese companies still lag behind American counterparts in both scientific breadth and depth, according to analysis of patents granted by the United States Patent and Trademark Office.
In 2022, 37 per cent of US firms’ patents cited scientific literature, compared to 22 per cent for Chinese firms. Furthermore, among science-linked patents, US companies cited an average of 17.5 scientific publications per patent, compared to five for Chinese firms.
In international scientific publishing, US publicly listed companies maintained substantially higher output, rising from an annual average of 12 papers in 2010 to 20 in 2021. By contrast, Chinese listed firms produced an average of four international papers in 2021, despite a 6.5-fold growth in international publications.
On the other hand, China used its dominance over rare earth mining and processing as a powerful chokepoint to counter US trade restrictions, Wang said.
“The US government and some US firms have been trying really hard over the past several years to identify alternative supply chains and potential substitute technologies, and whether they can develop some kind of magnets without rare earth materials,” he said.
“We are all sitting in the same boat. Now these two big guys are quarrelling with each other and we feel the boat is getting rocked. We would not feel comfortable.”
If this decoupling continued to its extremes, Wang warned, two separate technological ecosystems would emerge – one dominated by the US and one by China. “I am not sure whether this is what the US policymakers really want to see.”
“A certain level of competition is healthy for knowledge production and commercialisation,” he said. “But at the same time, do we really want to see a fragmented global scientific or innovation community? Probably not, because that means knowledge flow will become very inefficient.
“However, from where we are to that extreme, the distance is huge,” Wang added. “China has become one of the leading scientific knowledge producers on this planet. That also means working with China’s scientific community can bring a lot of benefits to the US.” -- SOUTH CHINA MORNING POST
