It’s too early to gauge the ultimate impact of the devaluation of the yuan on Washington state, which counts China as its largest trade partner and a growing source of tourist and real-estate investment dollars.

Share story

Washington state’s apple growers have been looking forward to a great upcoming season, fueled by a bountiful crop and by China’s opening its market to all varieties of U.S. apples.

But this week came some sobering news about that market: China, in a surprise move, devalued its yuan in the hopes of bolstering its slowing economy.

That, overnight, makes Washington state apples more expensive for the Chinese. But by itself, the currency shift — 4.4 percent this week through Thursday — isn’t enough to cause worry among Washington’s apple growers.

Washington trade with China*

Washington goods exported to China: $16.7 billion

Chinese goods imported to Washington: $8.8 billion

Percentage of Washington exports that go to China: 20

• Washington top goods exported to China: Aerospace, oil seeds, cereals, wood & wood products

*In 2013

Source: Washington Council on International Trade

Rather, the big concern is if the move “is signaling weakness of the economy in China and what it means in terms of the purchasing power of the middle class in China,” said Rebecca Lyons, international marketing director for the Washington Apple Commission.

It’s too early to gauge the ultimate impact of the devaluation of the yuan on Washington state, which counts China as its largest trade partner and a growing source of tourist and real-estate investment dollars.

On the negative side, the devaluation could make Washington companies that export to China less competitive. It could also raise the cost of making real-estate investments in this state, and traveling here.

On the flip side, Chinese investors seeking a more stable safe haven for their money could decide to invest more in this state.

So far, China’s currency devaluation is a “pretty small move after a long period of appreciation,” said Tim Duy, professor of economics at the University of Oregon. “I don’t know that this, in and of itself, significantly rocks the boat. I wouldn’t expect there to be large impacts to exporters from Washington or Oregon.”

“I’m more worried about what this says about China’s economy and demand for goods and services going forward,” said Duy, who added that the changes are pointing to “a marked slowing of China’s economy. Many firms exporting into China were basing their plans on a much faster rate of growth. This will disrupt those plans.”

The apple commission’s Lyons says she hasn’t heard much concern from growers yet.

Fruit growers here see China as a growing market for its goods, with a rising middle class concerned about the safety of the food supply and willing and able to pay for imported food that is deemed safer than that produced in China.

Last season, Washington state exported nearly $46 million worth of apples to Hong Kong and China.

“Food is somewhat more resistant” to price increases, Lyons said. “People have to eat.”

Boeing delivered 84 jets to China this year through July, out of 439 delivered worldwide. Most of those were the more expensive widebody planes, so they represent an estimated 18 percent of the total value of deliveries.

At this point, said a spokesman, “we don’t see any appreciable effect” on demand from China.

Port of Seattle spokesman Peter McGraw said Port officials have not noticed any immediate effect.

But with China representing more than 50 percent of its container volume, “this is a situation we’re going to continue to monitor closely,” he said.

With the now-weaker yuan, tech companies such as Microsoft, which sells goods in China, could end up making less money once those sales are converted to dollars.

Microsoft declined to comment, pointing only to what it said in its latest earnings call in July, that “macro conditions remain a challenge in some large opportunity markets like China, Russia, Japan and Brazil. There was slightly less impact from currency than our expectation.”

China became the No. 1 overseas tourism market for Seattle and Washington state last year, with Sea-Tac arrivals from China up 29 percent from 2013.

“It’s too soon to know, but indications for this market suggest that it will remain strong for Seattle and Washington,” said David Blanford, a spokesman for Visit Seattle, the private nonprofit tourism marketing organization for Seattle and King County.

Still, “many Chinese tourists are cost-sensitive,” said Norm Page, a partner at Davis Wright Tremaine law firm who heads its China practice and has lived in Shanghai for the past eight years.

“When the yen went way down in value, many of my Chinese friends were flocking to go to Japan on a trip,” said Page. “To the extent that the U.S. becomes that much more expensive, it may slow tourism.”

The local real-estate market, which has increasingly attracted wealthy buyers from China in recent years, will likely also see some impact.

The yuan’s devaluation this week doesn’t seem to have affected that so far, said Joseph Ho, director of new markets development for Berkshire Hathaway Home Services Northwest Real Estate.

Ho currently has a family from China looking at an $8 million waterfront property on Mercer Island, and another Chinese family looking at a $2 million home in West Bellevue.

“They feel strongly that they want to diversify,” and are choosing to do so by investing in U.S. real estate, Ho said.

Matthew Gardner, chief economist with Windermere Real Estate, said: “Overnight, it got more expensive to buy U.S. or Washington state real estate.”

But he’s not so concerned about the residential market.

Rather, “the bigger effect might come from the institutional investor. They’ve got to pay more to justify the return on investment.”

Chinese citizens also have poured funds into the U.S. through a federal program, known as EB-5, that allots permanent-residency visas to wealthy foreigners who invest in enterprises that create at least 10 jobs here.

Henry Liebman, founder and CEO of Seattle-based American Life, which has many projects nationwide using EB-5 money, said “making EB-5 more expensive is never a good thing.”

But there shouldn’t be much of an effect, for now, since the devaluation is small and many Chinese have offshore accounts so they aren’t affected, he said.

“The bigger deal is people in China have a hard time selling assets to raise capital,” he added.

David Bachman, a professor at the University of Washington’s Henry M. Jackson School of International Studies, believes the devaluation will “stimulate further capital outflow out of China.

“The perception in China, among people in the know, is that things are going to get worse,” Bachman said. “And they want to get out before they lose even more money. … Investments in property or in stocks or even in companies in the United States might tick up as a result of this.”