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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

China Tech Firms Gain Ground [Wall Street Journal]

Summary: A survey by McKinsey and Tsinghusa Univ. (China) shows Chinese tech firms are becoming increasingly competitive in terms of productivity and are moving to higher-end product segments. A Shanghai-based McKinsey director commented, "This is a major wakeup call for multinationals." Note the survey included Chinese subsidiaries of foreign companies, but one of the survey's surprising findings was private Chinese companies are particularly increasing productivity, matching or exceeding foreign rivals. Another development is Chinese firms expanding overseas largely "under the radar." Tech industry average ROE in China is almost double that of Germany, 12.1% vs. 6.8% respectively (in 2005), but still lags the U.S. average at 15.7%.
Related links: McKinsey publications on China. Commentary: Investing in China: Rapid GDP Growth Rates Indicate Prosperous FutureBusinessWeek: Beyond Beijing - Selling Across ChinaIRG's Chinese Tech Stock Weekly Update (click for IRG archive).
Potentially impacted stocks and ETFs: ETFs: Based on data from ETFConnect.com, China Fund (NYSE:CHN) has 13.2% of assets in IT (as of 10/31/06), iShares FTSE/Xinhua China 25 Index -- 21.4% Telecom (as of 10/31/06), Greater China Fund (NYSE:GCH) -- 9.3% Technology, JF China Region Fund (NYSE:JFC) -- 13% Semiconductors and 8.3% Electronic equip. (as of 6/31/06), PowerShares Golden Dragon Halter USX China (NYSEARCA:PGJ) -- 22.5% Telecom, 13.1% Internet, 5.8% Tech (as of 9/30/06)

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Source: McKinsey Survey: China Tech Moving Up Value Chain