China’s renminbi has followed the Japanese yen’s downward path versus the US dollar. Both countries are sticking with loose monetary policies in sharp contrast to the trajectory of the US. But the similarities end there. Chinese companies have more to gain from a weaker currency.

This week marked the renminbi’s biggest slide against the US dollar in three years. China continues to ease monetary policy while the US is expected to accelerate rate rises.

Currency traders expect further weakness soon. Beijing has little leeway for tightening. A credit crunch in the local property sector is well under way. Covid-related lockdowns in wealthy cities including Shanghai should slow this year’s economic growth.

Foreign sentiment is another factor. The biggest declines for the currency are in the offshore market. Hedging costs for offshore renminbi declines have hit the highest in 18 months, according to Bloomberg data. High options turnover of $19bn in the dollar-renminbi currency pair on Friday reflected growing market unease and highlighted the US dollar’s safe haven status.

Chinese companies should gain from a weaker renminbi via boosted top lines and higher share prices. Cheaper Chinese goods tend to lift demand and exports globally. The People’s Bank of China previously devalued the renminbi in 2015, which the US then derided as trade protectionism.

Unlike Japan — where a weak local currency is a double-edged sword — import prices rise along with inflationary pressure. Chinese companies benefit both ways. Once import prices rise beyond a certain threshold, deterring local consumption, Chinese companies often make their own substitutes — from smartphones to cars — to supply local consumers.

Even for companies that rely on imported raw materials, a weak renminbi should not be a big issue. The central bank has given them ample warnings to increase reserves in recent years to hedge any dollar exposure.

For now, expect continued weakness in the renminbi and the benchmark CSI 300 index of Shanghai and Shenzhen-listed stocks, which is down a fifth this year. Longer term, the currency decline should benefit local equities.