Xi Jinping risks setting off another trade war

China’s leaders are obsessed with lithium-ion batteries, electric cars and solar panels. These sorts of technologies will, Xi Jinping has proclaimed, become “pillars of the economy”. He is spending big to ensure this happens—meaning, in the years to come, that his ambitions will be felt across the world. A manufacturing export boom could very well lead to a trade war.

Mr Xi’s manufacturing obsession is explained by the need to offset China’s property slump, which is dragging on economic growth. Sales by the country’s 100 largest real-estate developers fell by 17% in 2023, and overall investment in residential buildings dropped by 8%. After a decade in which capital spending on property outstripped economic growth, officials now hope that manufacturing can pick up the slack. State-owned banks—corporate China’s main source of financing—are funnelling cash to industrial firms. In return for an extension of pandemic-era tax breaks and carve-outs for green industries, exporters in powerhouse provinces have been told to expand production. During the first 11 months of 2023 capital spending on smelting metals, manufacturing vehicles and making electrical equipment rose by 10%, 18% and 34%, respectively, compared with the same period in 2022.