China’s formerly white-hot tech sector is in the doldrums

“ONLY WHEN the year grows cold do we see the qualities of the pine and the cypress,” wrote Robin Li, the boss of Baidu, in a new year’s letter to staff at China’s main online-search firm. It was yet another recognition of a chill sweeping through the country’s technology industry. The lavish financing that promising startups have come to expect has dried up. Job cuts have multiplied. Even China’s tech giants have not been spared and are slashing bonuses and travel expenses.

This wintry spell is a remarkable reversal for a batch of firms, such as Meituan-Dianping, an online-services super-app, that are among China’s most vivacious. Early last year they appeared to be in rude health and were drawing in vast dollops of investment. More money was raised for venture-capital funds in China in the first half of 2018 than in America, the first time that had ever happened: $56bn compared with $42bn, according to Preqin, a data provider. By the autumn no fewer than 86 new “unicorns”—private, billion-dollar startups—had emerged.