Abstract: Recently, Western countries led by the United States have continuously implemented various restrictive measures to promote the "decoupling" strategy towards China in order to maintain global hegemony, such as Sion-US trade war, technology blockade, entity list, and foreign investment screening laws, etc. Decoupling which commonly defined as the process of weakening interdependence between two nations or blocs of nations, has been found to not only posts a great threat to international trade, but also profoundly influences the innovation development of Chinese manufacturing enterprises, especially by ways of restricting the free flow of technology and skilled talents and hindering the global innovation cooperation among manufacturing firms. Extant research had mostly discussed the drivers, evidence and impacts of the “decoupling”, but how will “decoupling” affect Chinese manufacturing firms’ innovation, and how should firms cope with such a more uncertain global environment, there still needs further investigation. This study empirically examines the impact of “decoupling” on firm’s innovation performance by using the samples of Chinese A-share listed manufacturing firms from 2015 to 2021. Taking the approach of difference-in-differences (DID), this paper treats the manufacturing firms that having foreign business in the western countries as treated group; and set the year of 2018 as shock year, for the reason that as the rising of deglobalization and geopolitical conflicts, most of western countries had a significant change of their political attitude towards China since 2018, for example, launching a trade war and issuing various restrictive policies, and had made strong decoupling with China in the aspects of economy, trade and technology, etc. Our research found that the current decoupling strategies towards China have a significant negative impact on manufacturing firms’ innovation performance, mainly by restricting the import of foreign technology and reducing the extent to which it participates in the global value chains. For one hand, decoupling enhances the threshold for foreign investment, which reduces the opportunity for firms to obtain advanced foreign technologies and take innovation cooperation; for the other hand, it intensifies the uncertainties for firms’ foreign investments, and decreases their willing and possibility of participating in global value chain. The results remain robust after various tests. The research also found that manufacturing firms can weaken the negative impact of decoupling on innovation performance through enhancing the R&D investment. Furthermore, this study takes some heterogeneity test, and the results show that the negative effect of decoupling is more significant on the samples of non-SOE enterprise, enterprises with higher financial constraints and lower international experience. This paper responds to the current attention about the impact of decoupling on the Chinese manufacturing enterprise’ innovation development, which not only reveals the influence mechanism of decoupling restricting firms’ innovation from a micro-perspective, but also provides theoretical and empirical support for firms to better cope with challenges under decoupling and deglobalization context.