Chinese Stocks Offer Hint at Innovation Prowess

The potential for a trade war between the U.S. and China may be intensifying, but don't forget the innovation war. Although the U.S. has stopped short of labeling China a “Strategic Competitor,” the Trump administration has effectively perpetuated the myth that China only excels by stealing intellectual property from others. Investors shouldn’t believe the rhetoric.

With the world’s largest cashless transaction volume, fastest big-data computing capability, largest electric-car market share, and most advanced high-speed rail network, the stereotype of China as a copycat is outdated. In certain areas, China is a trendsetter and a formidable competitor to Silicon Valley. With a 41 percent concentration in the information-technology sector, the MSCI China index has been outperforming the Shanghai Composite Index, which has more of a concentration in the financial sector.