However, China’s leadership is grappling not just with a property downturn, but a debt overhang among local governments and elevated youth unemployment. When the jobless rate among 16 to 24-year-olds topped 20pc last year, Beijing stopped publishing the data.
As parts of the private sector struggle, Xi is looking to massive public investment and other tax incentives to keep the show on the road. Yet despite a big stimulus programme and special investment incentives, the CSI 300 index of Shanghai-and Shenzhen-listed stocks remains more than 30pc down since early 2021.
Beijing is now set to raise another $850bn (£650bn) through new bond issues to fund more fiscal stimulus – that’s over half the UK government’s total annual spending.
While I believe China will power through, its economy is clearly failing to rack up fast growth for now, undermining the global outlook – which doesn’t help Chancellor Rachel Reeves one bit, as she struggles to make her sums add up ahead of the Oct 30 Budget.
The extent of the UK’s dependence on China is intensified by Beijing’s 90pc global production share of the rare earth elements vital to many green energy technologies, as well as their near monopoly when it comes to large-scale lithium exports – crucial in the production of electric vehicle batteries. Then there is China’s role in making the geopolitical weather too.
This column has often warned that the escalation of conflict in the Middle East could cause a nasty and highly inflationary oil price spike, stymying the efforts of Western central banks to lower interest rates. That could yet happen.
Now Beijing is stepping up its military harassment of Taiwan, following the election earlier this year of Lai Ching-te of the China-sceptic Democratic Progressive Party. Taiwan produces more than half the world’s semiconductors, of course – an input almost as important as crude oil these days when it comes to keeping the global economy moving.
Labour says it wants “diplomatic rapprochement” with China – no doubt with an eye on the UK economy. The reality is that China dominates and helps to determine the state of the broader global economy, which is why it’s so difficult, as Mr Lammy just discovered, to push Beijing around.