US Sanctions Push Chinese Firms Toward Open-Source Science and Self-Reliant Innovation by 70%

• A new study found US-sanctioned Chinese firms increased science-linked patent activity by 72%.

• Targeted firms turned more heavily to public academic literature after losing access to restricted technology.

• Researchers warn sanctions may encourage separate US- and China-led technology ecosystems.

• Chinese firms are growing faster in science-linked patents but still trail US companies in depth.

• Rare earth dominance gives China a counterweight in the technology rivalry.

US-sanctioned Chinese companies are increasingly relying on open scientific research to develop technology and work around restrictions on foreign know-how, according to a new study.

The research found that Chinese firms placed under US trade restrictions sharply increased their use of scientific literature in patent filings. Patent applications from sanctioned companies showed a 72% rise in citations to academic papers, suggesting that firms are turning to publicly available knowledge to innovate and reverse-engineer restricted technologies.

The United States has expanded its Entity List in recent years, saying the restrictions are needed to protect national security and maintain its technological advantage. However, the study argues that these measures may be producing effects beyond Washington’s original intentions.

The analysis examined Chinese patent filings over the 12 years through 2022. It found that US limits on access to advanced technologies pushed affected Chinese companies to draw more extensively from open-source scientific knowledge and invest more heavily in their own research capabilities.

The researchers wrote in a policy article published in the peer-reviewed journal Science that US trade sanctions, including the Entity List, have created consequences that policymakers may not have fully expected.

While such controls can disrupt targeted companies in the short term, the researchers said they may also accelerate the development of internal capabilities. Over time, this could push firms to adjust their strategies and contribute to the rise of separate technology systems that compete with the current global innovation network rather than integrating into it.

The study said this shift is taking place alongside the growth of corporate science in China. Chinese companies are increasingly connecting their innovation efforts with scientific research, as shown by the rising number of patents linked to academic literature and the growing volume of company-led scientific publications.

The researchers noted that being placed on the Entity List restricts access to US-origin proprietary technologies, but it does not prevent companies from using publicly available science, including research produced in the United States.

After being sanctioned, targeted Chinese firms added nearly 0.99 patents citing domestic scientific research, 0.27 patents citing non-US foreign science and 0.2 patents citing US science, according to the study.

To understand how trade controls change corporate behaviour, researchers from Shenzhen University, Tsinghua University and the University of Hong Kong studied a firm-level dataset of Chinese patents filed both domestically and internationally between 2010 and 2022.

They found that Chinese firms are becoming more active users and producers of scientific knowledge. Companies increasingly cited scientific publications in their patents, while also producing more academic papers themselves.

Study author Wang Yanbo, associate director of the Centre for Innovation and Entrepreneurship at HKU Business School, said US restrictions are unintentionally speeding up China’s move toward technological self-reliance.

Wang said that once Chinese firms are blocked from the US-dominated global innovation system, they are forced to rebuild capabilities on their own. In his view, companies cut off from foreign technology have little choice but to study the scientific foundations behind existing products and processes.

He said reverse engineering is only part of the process. Beneath every technology, there are scientific principles, and the most direct way to understand those principles is to read academic papers. That is why affected Chinese companies have become highly motivated to search the scientific literature, integrate that knowledge into innovation and eventually generate scientific knowledge themselves.

Wang said that with enough effort and some luck, firms can develop similar technologies that substitute for restricted US products. He added that the effect of US policy has been to push China toward independence and the creation of a more separate technological system.

The study found that placement on the US Entity List led to an average 72% increase in science-linked patents among targeted firms.

The broader data also showed that Chinese companies have rapidly expanded their use of science in innovation. Science-linked patents among Chinese firms grew 13.4-fold, compared with a 1.3-fold increase among US companies.

However, Chinese firms still trail their American counterparts in the scope and depth of scientific engagement, based on analysis of patents granted by the United States Patent and Trademark Office.

In 2022, 37% of patents from US firms cited scientific literature, compared with 22% for Chinese firms. Among patents that did cite science, US companies referenced an average of 17.5 scientific publications per patent, while Chinese firms cited an average of five.

A similar gap remains in international scientific publishing. Publicly listed US companies increased their annual average output from 12 papers in 2010 to 20 papers in 2021.

Chinese listed firms, meanwhile, produced an average of four international papers in 2021. That was still far lower than the US level, even though Chinese corporate international publications had grown 6.5-fold.

The study highlights a complex dynamic in the US-China technology rivalry. While Washington is using export controls and the Entity List to limit Chinese access to sensitive technologies, China has its own leverage in global supply chains.

Wang pointed to China’s dominance in rare earth mining and processing as a powerful chokepoint that can be used in response to US trade restrictions. Rare earth elements are essential for products such as high-performance magnets, electric vehicles, defence systems and clean-energy technologies.

He said the US government and some American companies have spent recent years trying to identify alternative supply chains and develop substitute technologies, including magnets that do not rely on rare earth materials.

Wang described the situation as one in which both major powers are in the same boat, but their conflict is making the entire system less stable. He warned that if decoupling continues too far, the world could eventually see two separate technology ecosystems: one centred on the United States and the other led by China.

He questioned whether that outcome is truly what US policymakers want. Some competition, he said, can be useful for knowledge creation and commercialisation. But a fragmented global scientific and innovation community would make the flow of knowledge far less efficient.

At the same time, Wang said the world is still far from that extreme scenario. China has become one of the leading producers of scientific knowledge globally, which means cooperation with its scientific community could still bring significant benefits to the United States.

The study suggests that sanctions can slow firms in the near term but may also encourage them to build alternative capabilities. For Chinese companies facing restricted access to foreign technology, open scientific literature is becoming an increasingly important route to innovation.

As the US and China continue to compete over advanced technology, the findings point to an unintended consequence of trade controls: efforts to contain technological progress may, in some cases, push targeted firms to become more self-reliant.