The Economist, citing research by CB Insights, noted last week that, in the last three months of 2018, deals to commit venture capital to Chinese startups slumped in number by two-fifths, while private-equity financing dropped by more than a quarter, to under $10 billion compared to the previous three months.

Yesterday, the South China Morning Post, citing research by Boston-based management consultancy Bain & Company, warned that China’s internet and technology sector is a “bubble waiting to burst.” In 2018, private equity firms invested more than $59 billion in Chinese internet and technology startups, according to Bain, accounting for more than 70% of total deal value for the sector in the Asia Pacific region. Bain says private equity investors paid high multiples to secure stakes in Chinese tech companies that have earned poor returns—and predicts that exiting from those investments will now prove extremely difficult.

As it gets harder to raise money from venture investors, many Chinese tech startups are hoping to raise capital by listing shares on public exchanges. But the long queue of firms seeking public exit, and the dismal performance of last year’s China tech IPOs, has dampened the appetite of retail investors.

Even established firms like Baidu, Alibaba and Tencent have announced restructuring plans in recent months. Meanwhile, younger ventures, including Didi Chuxing, Xiaomi, and Meituan Dianping, are slashing bonuses and laying off staff. On Friday, Mobike, a once high-flying bike-sharing concern that raised billions in venture funding, said it will close all international operations to focus on China.

The travails of China’s tech ventures come as many Western analysts have turned bullish on the broader market for China shares. In November, Goldman Sachs and Morgan Stanley both predicted a rally for China stocks. In the months that followed, foreign investors piled into Chinese equities. The Morgan Stanley Capital International index, a leading benchmark for billions of dollars worth of global stock funds, recently announced that it plans to quadruple the representation of China stocks in its global portfolio.

That enthusiasm is hard to square with a flurry of recent reports suggesting the rapid deceleration of China’s economy. An analysis by Chang-Tai Hsieh of the University of Chicago and three co-authors from the Chinese University of Hong Kong made headlines earlier this month with its finding that China’s industrial output has been consistently exaggerated. The study concludes China’s GDP growth has been overstated by two percentage points on average every year from 2008 to 2016, inflating the size of China’s economy by 16%, or more than $1.5 trillion.

Looming over all the prognosticating: the uncertain outcome of U.S.-China trade talks. Bloomberg reports it’s unlikely President Trump will meet with Chinese president Xi Jinping this month. Former Trump economic adviser Gary Cohn says his ex-boss is “desperate for a deal.” But Trump himself insists he is in “no rush” to sign an agreement with China and, if Beijing won’t meet his terms, is more than willing to “walk away.”

More China news below.

Economy and Trade

Now you see it, now you don't. China's current account surplus has shriveled to just 0.4% of GDP. Analysts at Morgan Stanley predict China could actually tip into current account deficit this year. That would be the first time that's happened since 1993. The Economist

Grounded. When China grounded 96 Boeing planes on Monday, two days before the U.S. did likewise, it was asserting its growing clout as aviation superpower. Wall Street Journal

Deal me in. Chinese investment in U.S. startups remains resilient despite new U.S. legislation some thought would restrict deals, according to a new report from the Rhodium Group. Rhodium found that the number of investment deals in U.S. startups involving Chinese investors declined modestly after August, following passage of a law designed to stem China’s involvement in strategic technologies.But total dollars invested by Chinese firms in startups has remained stable through February, after a record $3.3 billion in 2018. Wall Street Journal

Innovation and Tech

A.I. Superpower. China's output of research papers on artificial intelligence is about to overtake that of the United States, according to the Seattle-based Allen Institute for Artificial Intelligence. The Verge

About face. In the southern Chinese city of Shenzhen, the  subway operator is testing 5G technologies including facial-recognition ticketing. TechinAsia

Why Hong Kong remains a tech backwater.  Hong Kong bills itself as "Asia's World City," an ardent proponet of free trade, global commerce, and entrepreneurialism. In reality, it is a bastion of monopoly capitalism. Nothing demonstrates Hong Kong's distrust of free-market competition more clearly than its unwillingness to challenge stranglehold of its troglodyte taxi mafia. South China Morning Post

In Case You Missed It

Choking China Washington Post

How TikTok Became the First Chinese App to Take the World By Storm South China Morning Post

Politics and Policy

China promises to play fair. On Friday, the National People's Congress, China's rubber-stamp legislature, approved a law aimed at prohibiting forced technology transfer and illegal government meddling into foreign business practices. But the White House expressed skepticism about how it would be enforced. Politico

This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.