Cathie Wood laid out her case for why her firm has for months been paring holdings tied to Chinese technology giants. The superstar fund manager also rebutted investor Michael Burry after he bet against her flagship ETF.

“I think that China-U.S. saber rattling, which has intensified under this administration — a surprise to me — is bringing more activity back home,” Wood said in a Bloomberg Television interview taped on Aug. 13. “The supply-chain reorganization is going to be a positive for the U.S., and it’ll be somewhat of a negative for China.”

In a tweet on Tuesday, she also hit back at Burry of “The Big Short” fame — who through his firm Scion Asset Management owned bearish put contracts against 235,500 shares of her Ark Innovation ETF.

Wood said in her tweet that she doesn’t think Burry understands the fundamentals that are creating “explosive growth and investment opportunities” in the innovation space.

Wood’s ARKK ETF is now sitting with no exposure to shares of companies in the world’s second-biggest economy. Her firm had dumped Chinese stocks in July as Beijing’s clampdown on sectors ranging from education to technology wiped about US$1 trillion off shares listed on the mainland, Hong Kong and the U.S.

“The valuation of the market is going to stay down for a long time, until they become more inviting to foreign capital again, and maybe want to integrate a little bit more into the world,” she said during the Aug. 13 interview. The crackdowns by the Chinese government are “contradictory to their desire to become one of the most innovative countries in the world.”

On Tuesday, China’s market regulator issued draft rules banning unfair competition among online platform operators, driving a fifth consecutive day of selling in the nation’s bellwether technology stocks.

Wood acknowledged China’s advancements in computer science, engineering and financial technology, especially as WeChat and AliPay were faster to introduce digital wallets than companies in the U.S. However, she said China seems to be “retreating in a sense when it comes to allowing any kind of data to come out of the country.”

“The whole country is focused on becoming number one in innovation,” she said. “I’m wondering if something’s changing there, though.” On Tuesday last week, Wood had said in a webinar hosted by her firm Ark Investment Management that she was keeping an “open mind” on Chinese shares.After attracting billions of dollars to her Ark funds and trouncing the market in 2020 with her thematic tech bets, Wood and her firm have struggled to maintain momentum this year as concerns grow over lofty valuations.

ARKK had about 8 per cent of its assets tied to Chinese stocks in February. Other funds such as the Ark Next Generation Internet ETF have also reduced positions in Chinese firms. The ARK Fintech Innovation ETF still has more than 9 per cent of its portfolio tied to companies based in the country including JD.com Inc. and Tencent Holdings Ltd., data compiled by Bloomberg show.