While China has been a massive contributor to the expansion of global tech, the value of venture capital investments for the second quarter of 2019 was down 77% year-on-year according a piece on CNBC by Arjun Kharpal. Some investors are saying that the lack of innovation among new start-ups was a key reason why this fall in investment has taken place. Another reason, according to CNBC after speaking to venture capitalists pointed to “poor performance” of some Chinese technology companies in the public markets.
So the lull in innovation is one of the major forces behind a the recent plunge. The value of VC investment in China was $9.7 billion in the second quarter of 2019, according to the CNBC article and attributed to Prequin. This number fell from $41.3 billion invested in the same period last year, down 77%. China has delivered some of the most exciting companies including Alibaba, Bytedance, TikTok parent and others. Some are now saying that VR or virtual reality will be the next big thing with a lot saying that AI will explode on to the global stage.
Our Views: There are many people who feel that the US China Trade War will continue and that tariffs are here to stay. Keep in mind that there must be a solution that both the US and China can bring back to their decision makers that will allow both countries to sign a trade deal. Will the trade deal take place? We have said NO from the beginning as the issues that drive free trade are so natural the the United States, especially since WWII and so unnatural to many other of the US trading partners. We are not talking about being fair but about a system designed by the US in 1944 that supported other nations in moving from poverty to affluence. The system is designed to flood the US economy and the system must be changed.