By David Randall

NEW YORK (Reuters), – A Chinese economic slowdown could impact the entire global economy, warned Cathie Wood, ARK Invest’s star stock picker.

Wood stated that China’s crackdown on various sectors such as gaming and education, to which Wood belongs, has increased the possibility of an error in policy, leading to a steep slowdown.

“I really do think that the policy makers in China are beginning to play with fire,” she said, adding “We will look back at this period in six months and say ‘Wasn’t it obvious there will be a major and unexpected slowdown in China?'”

Wood reiterated her optimism about Tesla (NASDAQ) Inc electric car manufacturer, citing strong September sales in China despite a 17% decline in passenger vehicle sales over the previous year.

Last year, the ARK Innovation Fund rallied due to its large stakes in companies such as Tesla or Teledoc Health Inc which soared during a pandemic. The fund’s performance has been affected by inflation worries. It fell 11.4% last year, compared to an 17% increase for the benchmark.

Shares of ARK Innovation rose 1.5% on Tuesday afternoon trading thanks to a 2.4% rise in Tesla, the top-holding company.