Abstract:This paper explores whether international trade frictions force Chinese firms to enhance their innovative activities. Empirical results from global anti-dumping and anti-subsidy sanctions imposed on Chinese firms as exogenous shocks show that the innovative activities of Chinese firms increase significantly after experiencing trade frictions. Moreover, the positive relationship between trade frictions and corporate innovation is more significant in highly export-oriented firms,firms facing stronger competition, and high-tech firms.This suggests that trade importance, competitive pressure, and high-tech features motivate firms to engage more in corporate innovation in response to trade frictions. Results also show that the reverse push effect of trade frictions on innovation is more pronounced in firms with more technical talents, in firms that are less financially constrained, and in state-owned enterprises,as these firms are equipped with more abundant innovative resources. Further analyses show that international trade frictions give rise to relatively high-quality innovations, and this effect can last for up to four years. And boosting innovation activities helps relieve the negative impact of trade frictions on firms’export performance. Our research not only contributes to the literature on corporate innovation and international trade frictions, but also provides practical guidance for China’s transformation from a manufacturing giant to a manufacturing powerhouse. Besides, our conclusions may also offer theoretical implications for the recent heated discussions on how to cope with Sino-US trade frictions.