China's tech innovation drives global competition

Chinese company CATL has developed a battery pack that could eliminate range anxiety, offering up to 1,500km of range on a single charge. The battery also allows for 520km of range to be added in just five minutes. This advancement is part of China's broader push to dominate the electric vehicle market.

Chinese car maker BYD has introduced a vehicle-mounted drone platform. In theory, the average Chinese electric car driver could drive from Beijing to Shanghai on a single charge, receiving food deliveries on the way.

China is a global leader in areas such as robotics, clean energy, and electric vehicles. It is also increasingly competitive with the US on artificial intelligence, with significant investments in AI infrastructure.

Despite these challenges, China's innovation-driven industries continue to thrive. The country submits around four times more patents than the United States, highlighting its strong focus on technological development. However, conventional economic indicators such as retail sales and housing remain weak, indicating a complex economic landscape.

Investors in China must navigate a dual-speed economy, where innovation powerhouses coexist with state-owned enterprises that are less focused on shareholder returns. Fund managers like Will Mackintosh-Whyte note that advanced manufacturing and technology are becoming the new growth drivers, while consumer-driven sectors remain weaker.

China's AI sector is experiencing rapid growth, with significant investment in infrastructure. While it lacks the most advanced AI models found in the US, its open-source approach allows for broader adoption. Investors are gaining exposure to AI through companies like Alibaba and non-US listed firms with substantial Chinese operations.