“Winter is coming,” was the warning from the Chief Executive of a Chinese search engine as he tells them that the cold is starting in 2019. “Only when the year grows cold do we see the qualities of pine and the cypress,” Li wrote in reference to a Chinese proverb. Mr Robin Li had many comments and ideas for his employees. He focused on AI or Artificial Intelligence and said that it will help Baidu clients and help cut costs. The US China trade is taking its toll – and the evidence is the recent fall of Apple stock, according to the popular press and a slow-down in the Chinese economy.
The China-US trade war is driving the slowdown. China cut its growth estimates from 6.5 percent in 2019 to 6.3 percent. Ford, Intel and Apple all expressed concerns of slower growth in China. The key question will be, can China use its State Capitalism Model to help it through the winter. Baidu posted 27 percent growth in third-quarter revenue in October to 28.2 billion yuan or $4.11 billion US. In the letter, Li told staff that 2018 was good year for Baidu, as it saw revenue exceed 100 billion yuan or $14.6 billion.
There is growing concern that China and the US are locked in a trade war in which many countries suffer some economic weakness. The US, China, Japan and Germany could all see weaker growth in 2019. Prepare for a cold winter.