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Paper short abstract

This paper calls for a cautious view of China’s technical self-reliance. By examining Chinese hi-tech firms' innovation returns and supply chain dependence under US export control, it argues that while patenting surged, the sustainability of economic returns and technical autonomy remained limited.

Paper long abstract

The Trump administration’s sanctions on the Huawei in 2019 seemingly sounded the horn of a Second Cold War. The trend of geo-economic fragmentation, the escalating U.S.-led blockade, and China’s doubled effort in industrial policies since 2014 would logically accelerate China’s high-tech innovation, as analyses on patenting activities among Chinese firms following U.S. export controls (Lin et al., 2025). However, increased innovation output does not imply genuine technological self-reliance. Rather than merely focusing on patent quantity and R&D expenditure, we evaluate China’s self-reliance in high-tech from two dimensions: the economic returns to firms' innovation measured by financial performance and the degree of techno-dependence captured by firms’ reliance on foreign suppliers.

This study examines China’s high-tech firms using a mixed-methods design that integrates case studies with firm-level cross-year panel fixed-effects analysis. Our results show that while patenting activity rose markedly after U.S. sanctions, its marginal contribution to firms’ financial performance declines, without a corresponding reduction in share of foreign suppliers. Evidence from leading firms even suggests that China’s techno-dependence remains entrenched, particularly in upstream value-chain segments facing the most severe sanctions. Therefore, this article argues that China’s path to catch-up is a much longer Great March than prevailing narratives imply, especially in sectors where interdependence has been weaponized in geo-economic rivalry (Starrs et al., 2025). The U.S.–China tech war has undoubtedly stimulated China’s greater investment in localization and innovation, but the extent to which this represents genuine technical autonomy and economic sustainability remains to be seen.