When it comes to patent activity, China has a commanding lead over the rest of the world: in 2023, China had a 47.2% share of global patent applications. This has all led to China being the global leader in five key technologies – Unmanned aerial
vehicles, solar panels, graphene, high-speed rail, and EVs and lithium batteries – according to Bloomberg.
China has also emerged as a global leader in clinical trials, with a structural shift from focusing on generic drugs to innovative drugs. Indeed, within the past ten years, China’s share of trial starts has gone from 5% to 30%, whereas America’s has fallen slightly, from 38% to 35%. China also has a lead in gene and cell therapy trials.
Some investors have become wary of China in recent years, after some measures enacted aimed at reigning in profitability of some high-tech sectors through 2021, but the reality is that innovation has real government support in China, whether that be through tax incentives, government grants and state-backed venture capital funds.
China tends to be a country where competition is rife, particularly within the EV market and some of the renewable energy industries, but we’ve seen a more recent focus from the government to address this with the “antiinvolution” campaign.
Some of these policies should support consolidation within many of these industries and in many of them we are already seeing the likely winners emerging – providing active fund managers such as Dale Nicholls at Fidelity China Special Situations plc with numerous opportunities.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore.
