The question of impact on innovation is more complicated. As this report shows, China’s state backing for Huawei and ZTE allowed the two of them to seize global market share from far more innovative non-Chinese telecom equipment companies by severely limiting their competitors’ access to China and related markets, and supporting Huawei’s and ZTE’s rapid expansion overseas. This has eroded non-Chinese companies’ revenue growth, which has slowed the rate at which they could increase spending on research and development (R&D), thus slowing their pace of innovation from what it otherwise would have been. Both Chinese companies, but particularly Huawei, invest significantly in R&D and generate a significant number of international patents. However, they patent less than their global market shares would predict, and considering patent quality and other measures of innovation, such as accepted 5G standards, Ericsson and Nokia still remain significantly ahead of Huawei and ZTE, even after unfairly losing global market share.
For the report: https://itif.org/publications/2020/06/22/how-chinas-mercantilist-policies-have-undermined-global-innovation-telecom?mc_cid=9b3ef22b02&mc_eid=3171ceba53