BEIJING: China’s thriving IT sector has experienced “massive layoffs” in 2018 which turned out to be a “chaotic year” for the industry, an official media report here said on Wednesday, highlighting effects of the slowdown on the world’s second-largest economy.
“In June, hundreds of P2P lenders fell like dominoes. Two months later, the revenue of image editing software developer Meitu fell 5.9 percent year-on-year, reporting a USD 127 million net loss,” a write-up in the state-run Global Times said.
The company had been laying off people since the end of 2017. In the fall, online retailers Alibaba and JD.com also reduced new hires, it said.
Dwelling on how a once thriving internet industry has started feeling the chill this year, it said from a macroeconomic perspective, China is facing a tightening environment for its currency and stricter financial regulations.
In addition to the simmering trade war with the US, capital became prudent. As IT companies are finding it harder to secure financing, they should save their strength and prepare for future challenges, the write up said highlighting various measures by the industry and the government to revive the sector.
China is locked in a trade war with the US over President Donald Trump’s demand to cut the USD 375 billion trade deficit. With the continued economic slowdown, China is under increasing pressure from Trump for reciprocal trade arrangements which could hit its economy further.
The Chinese economy grew at 6.5 percent in the third quarter posting its slowest growth since 2009 as it grappled with the intensifying trade war with the US and mounting local government debt which rose to USD 2.58 trillion.
In his New Year address, President Xi Jinping said despite the slowdown the Chinese economy stayed within a reasonable range in 2018.
Adding to the worries, China’s stock market became the world’s worst performer last year, ending with a loss of 28 percent.
American companies like Apple and FedEx have already attributed lowered revenue estimates to the trade war with China. Other large US firms like Caterpillar, General Motors and Boeing also view China’s market as critical to their future growth.