China's Once-Booming Tech Sector Hits Some Obstacles

Photo Credit: ALEKSANDAR PLAVEVSKI/EPA-EFE/Shutterstock
July 31, 2018
Updated 6mo ago

By Bridgette Webb

As the U.S. tech sector regained some of its footing Tuesday, last week's tech sell-off continues to undermine some of China's tech bellwethers Tencent and Alibaba.

Sara Hsu, economist and associate professor at SUNY New Paltz, said that unlike Facebook and Twitter, hamstrung by slower-than-expected user growth, Chinese tech stocks have more serious investment hurdles ahead.

"There are concerns of a trade war, that it could possibly dampen investment from the United States," Hsu said in an interview Tuesday with Cheddar. "Particularly for Tencent and Alibaba which have a lot of interest in the United States, in terms of trade and investment."

The trade spat between Washington and Beijing has not only quelled investors’ appetites, it has also discouraged Chinese tech giants from expanding internationally.

Alibaba's Founder, Jack Ma, had pledged to create 1 million jobs in the U.S. and increase the amount of goods that ship from America to China.

Hsu said that China's tech stocks are also faced with tightening liquidity and currency depreciation.

"There are depreciation pressures on the Chinese currency which is going to affect the earnings report for companies that are listed on the New York Stock Exchange," she said.

The Chinese Renminbi has slipped in the past two months and hit its lowest level in more than a year, despite measures by central bankers in Beijing to support China’s currency.

For more on this story, click here.