China’s political leaders are facing pressure to support the country’s fragile economic recovery. To achieve this, they are shifting their focus away from real estate and local debt and toward manufacturing, while also increasing borrowing by the central government. State-controlled banks in China have begun reducing real estate lending, redirecting substantial sums of money to manufacturers in fast-growing industries such as electric cars and semiconductors. However, this approach carries risks, such as oversupply of factories and potential trade conflicts with China’s trading partners. China’s housing market is struggling, and the government is cautious about bailing it out through increased housing loans. Instead, it is prioritizing advanced manufacturing industries and providing assistance to local governments. Despite challenges, economists believe that significant investments in new manufacturing technologies will lead to future growth. The transition from real estate loans to manufacturing loans in the Chinese banking system began several years ago. Industrial companies have seen a surge in lending, particularly in sectors like semiconductor manufacturing and electric car production. However, some economists express concerns about the effectiveness of this strategy in improving the broader economy, given the magnitude of the real estate sector’s problems. China’s increased manufacturing output may also lead to more exports, but this could raise tensions with countries like the United States and the European Union, which are reluctant to further increase their trade deficits with China. China is now targeting developing countries with aging manufacturing sectors as potential export markets. China’s share of global manufacturing has grown significantly over the years, while the United States’ share has decreased. Although China has repeatedly tried to control its debt addiction, local government debt has surged, and overall debt levels have increased. Efforts to defuse debt have been largely ineffective, and China’s debt is now much larger relative to its economic output compared to many developed countries.