Impacts of Entity List Events on Performance of High-end Manufacturing Enterprises in China

实体清单事件对中国高端制造企业绩效影响

Abstract

As an important member of the global supply chain, China has made extraordinary outstanding contributions and has great significance to the economy and trade of the whole world. As an important trading ally as well as a strong competitor, the United States has gradually increased its economic and trade restrictions on China in recent years. Especially by adopting the export restriction policy of "Entity List", United States has directly suppressed the high-end manufacturing industry in China, and the policy also caused the supply chain interruption in world wide. The impacts of these entity list events and effective response measures towards this kind of export restriction policy and supply chain interruption are especially worth exploring. In this paper, we use the event study method to examine the impacts of multiple entity list events in the context of the US-China trade friction. Aiming to compare and analyze the impact and changes of the influence of the entity list event and further to explore the causes, we focus on seven different entity list events involved more than 96 enterprises in the Chinese high-end manufacturing industry from 2018 to 2021. The results of the study show that initially the entity list event has a significant negative impact on firm performance, while the degree of negative impact diminishes over time and some of the events even show positive feedback in recent years. At the same time, impacts of entity list events exist an significant industry diffusion effect, with the impacts spreading to other enterprises in the four related specific high-end manufacturing industry. Further analysis reveals that the better the operations, the higher the concentration of supply chains and the more stable the innovation capacity, the better the response to the risk of supply chain disruption caused by the export restriction policy such as the entity list. Therefore, the government, high-end manufacturing industry and enterprises should be fully aware of the impacts of the entity list events and be well prepared to cope with them. The government should especially pay more attention to leading the collaboration of all these multiple parties to develop related capacities and improve the future situation. Enterprises should improve on independent innovation and reasonably increase investment in research and development. In addition, all these multiple parties should jointly promote the development of China's high-end manufacturing industry and develop the risk coping ability towards uncertain external environment.