China’s moves to spur its slowing economy and restore investor confidence are having an important but less obvious effect on the tech sector: Strengthening Chinese companies that already were making life difficult for U.S. rivals, many of whom have staked their growth plans on the world’s second-largest market.
The government’s surprise decision in early August to devalue China’s currency, in particular, could make it harder for U.S. companies to sell into the country by making their products more expensive to local buyers.
At the same time, a cheaper yuan makes Chinese-produced goods less costly abroad—dovetailing with government policies that have been promoting foreign sales by Chinese technology vendors.
“We see the key driver [of government action] being exports,” said Handel Jones, a consultant at International Business Strategies Inc. who has written books on China’s high-tech sector. Chinese companies “will become more aggressive.”
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