<p>This study empirically analyzes the impact of state-owned enterprises (SOEs) on the emergence of new technologies in a panel of Chinese prefectures. We trace the technological diversification path of regions using patent data and find that regions with higher SOEs shares are less capable of developing new technologies. Further tests demonstrate that SOEs narrow the scope of related diversification process. An obvious obstacle in cooperation lies between SOEs and other entities, implying fewer collaborative innovations in regions with higher SOEs shares and subsequently obstructing the emergence of new technologies from existing technological bases. Our work provides evidence that the ownership structure of the regional economy affects the opportunities for regions to diversify into new technologies from local capabilities, adding new insights to understand the economic divergence across regions in some countries after they replaced socialist regimes with market-based institutions.</p>