Geopolitical tensions with the U.S. could 'supercharge' China's innovation, JPMorgan says

U.S.-China tensions person pushed Beijing to beryllium much self-sufficient, and that could beryllium a bully happening for innovators successful China, according to an concern specializer astatine JPMorgan Asset Management.

"One of the unintended consequences of this propulsion and shove betwixt the U.S. and China is that it has conscionable underscored this determination successful China to go self-sufficient successful a full assortment of industries," Alexander Treves told CNBC's "Street Signs Asia" connected Thursday.

In the mid-1990s, Chinese companies were mostly wide marketplace manufacturers of "commoditized goods," helium added.

"Now, you've got genuine tech innovators," helium said. "I deliberation that the geopolitical hostility you're talking astir volition conscionable really supercharge that — due to the fact that China needs to bash these things itself, and they volition transportation connected with advancement successful that area."

China has stepped up concern into its section spot manufacture successful a bid to beryllium self-reliant erstwhile it comes to important exertion for assorted products — from electrical vehicles to mobile phones. But it still relies heavy connected overseas technology.

Treves said investors should look for companies that volition win successful spite of geopolitical tensions.

"Geopolitics are present to stay, truthful get utilized to it, conscionable judge that," helium told CNBC.

JPMorgan has been investing successful Chinse tech companies this year, the concern specializer said.

Some of the firms person "world-leading concern models" and a immense addressable market, portion valuations are amended than they utilized to be, helium added.

Additionally, profitability has improved due to the fact that companies are spending little and being little assertive against each different — partially due to the fact that of the regulations, Treves said.

"We've been adding to the Chinese net companies this twelvemonth for precisely that reason," helium said.

Separately, successful the electrical conveyance abstraction successful China, Treves said JPMorgan looks for companies with the astir pricing powerfulness — usually the artillery makers alternatively than circumstantial car brands.

"Then you don't request to marque a stake connected which marque volition succeed, connected … whether idiosyncratic volition beryllium buying this marque oregon that brand," helium said.

Another money manager, Edmund Harriss, is caput of Asian and emerging marketplace investments astatine Guinness Asset Management, is besides optimistic astir China's EV sector, CNBC Pro reported.

He named 2 stocks to play the EV boom, and said companies successful the electrical conveyance sector, mill automation, and sustainable vigor tract would apt outperform their planetary peers implicit the adjacent 5 to 20 years.

— CNBC's Arjun Kharpal contributed to this report.