If China’s economy has slowed, one would not know it from a quick glance at the performance of Baidu. Revenues at the country’s biggest internet search engine by share of advertising sales were up 60 per cent from a year earlier in the second quarter – net income was 70 per cent higher. More of that is forecast for the next three months.

Notably, small and medium-sized enterprises – one of China’s most beleaguered sectors – is driving that growth. Baidu added 31,000 advertising customers over the quarter, most of them SMEs. After all, more targeted search advertising is a good use of marketing budgets shrinking under slowing exports and rising labour costs.

Still, there are signs that margin pressure is growing for Baidu. The fact that the search giant is tapping China’s smaller cities to support much of its customer growth translates into smaller advertising budgets. Ad spend per customer picked up by a third from a year earlier last quarter, but this was the lowest growth since the start of 2010.