China’s political leaders are changing their economic strategy in order to support the country’s fragile recovery. They are moving away from relying on real estate and local debt as drivers of growth and instead focusing on manufacturing and increasing central government borrowing. State-controlled banks in China have begun reducing real estate lending for the first time since comparable record-keeping began in 2005. Instead, they are directing large sums of money towards manufacturers in industries such as electric cars and semiconductors. However, there are risks involved, including a chronic oversupply of factories and potential trade disputes with China’s trading partners. China’s shift towards manufacturing loans highlights its reluctance to bail out the debt-burdened property market. While this investment push may stimulate short-term growth, it does little to address the long-term drag on growth caused by accumulating debt. As China continues to build factories through government-backed financing, it faces challenges similar to those encountered after Mao’s death in 1976. Despite these challenges, economists predict that investments in new manufacturing technologies will pay off. China’s banks have been decreasing lending to the real estate sector while increasing lending to industrial companies, particularly in fields like semiconductors, electric cars, and shipbuilding. However, there are concerns that this increased investment in manufacturing may not adequately address the broader economic issues caused by the struggling real estate sector. China’s factory construction efforts may also strain relationships with other countries, as much of the additional output is likely to be exported. China is actively seeking to develop trade relationships with developing countries that have aging manufacturing sectors, providing opportunities for exports from its highly efficient factories. China’s share of global manufacturing has significantly increased since 2000, while the United States’ share has declined. Despite attempts to control debt, China’s overall debt has continued to grow and is proportionately larger than that of many developed countries. Previous efforts to defuse debt have been ineffective.