China’s currency has come under more pressure to appreciate since the US and Japan moved to strengthen the yen, according to Bloomberg Economics. This trend potentially drains support for growth as the yuan gains despite falling bond yields and a sluggish economy.

“The boost to the yen from US-Japan intervention in late July spilled over to other Asian currencies, including the Chinese yuan,” Bloomberg economists David Qu and Chang Shu said in a report published Wednesday. This spillover has exacerbated an upward trend in the yuan that is currently at odds with a widening yield disadvantage against the dollar.

While the tech sector remains thriving, weakness persists across much of the broader economy. The recent intervention has created a complex landscape for the yuan, complicating China's economic outlook amidst shifting regional currency dynamics.