Rise of China's Robotics Industry: from Manufacturing Arms to Embodied AI

The history, the goals, the future of China's robotics industry

Hi all, as I mentioned, I finally got my Manus AI invite, and I was stoked to try it out. Manus’s research capabilities supported this deep-dive piece, and I must say it's comprehensive and efficient. Even though the pro version of OpenAI limits deep research to twice a day (I guess that’s good; it limits people’s abuse of it), Manus was quite impressive in these tasks.

Now, a belated but long deep dive, with the support from my “best friends” Manus and ChatGPT o3.

China's robotics industry did not just take off overnight; it has been years, if not decades, in the making. As I’ve mentioned in the EV to Robotics piece, many of the tangentially related industries grew together, propelled by national planning and policies and technological and manufacturing synergy.

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Source: ChatGPT generated

In recent months, with the talk of reshoring manufacturing jobs to the U.S., attention has been directed to the possibility of using industrial robots to fill in the gaps, and a discussion of whether China has been utilizing robots to replace some of the aging labor force.

Since the rise of globalization, China has been known to be the manufacturer of all goods, essentially for the world, including everything from smartphones to car parts to home appliances.

Today, we explore how that has laid the foundation for some of its advanced physical AI. More so, has China been adopting industrial robots and transitioning from human labor to robotic labor, especially given the country’s declining workforce and aging population?

The robotics industry has undergone a remarkable transformation over the past five decades, evolving from basic research and prototype development to becoming a global leader in industrial and embodied AI robotics. This comprehensive report examines the origins, development trajectory, technological strengths, applications, government policies, and entrepreneurial ecosystem shaping China's robotics sector.

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A. Long-term Strategic Planning

Notable Milestones in the Recent 10 Years

• 2015: Launch of "Made in China 2025" initiative, identifying robotics as a strategic industry

• 2016: China's first National Robotics Development Plan released

• 2021: Release of the 14th Five-Year Plan for the Robotics Industry

• 2023: Introduction of the "Robotics+" Application Action Plan

• 2023: Release of Guiding Opinions on the Innovative Development of Humanoid Robots

• 2025: First mention of embodied AI in the Government Work Report, signaling its strategic importance

Source: International Federation of Robotics Press Release

China has ~1.75 million industrial robots on factory floors, more than any other country, and 51% of global annual installations as of 2023. According to a Siemens-sponsored robotics podcast, the Germans are also adopting more across industries, but are still nowhere close to the adoption rate. This is also mainly due to the cost efficiency advantages of the products in China. The cost of a six-axis arm has fallen more than 60% in the last decade, and that is due to the hardware manufacturing engineering and know-how that we’ll go into further below as well. (Below, we go into details of the most important policies that drove this development)

B. Early Development of China's Robotics Industry

Infancy Stage (1970s-2010s) China's robotics industry has evolved through several distinct phases

• Initial Research Phase (1970s-1980s): China's robotics journey began in the 1970s with fundamental research at institutions like the Chinese Academy of Sciences (CAS) and Harbin Institute of Technology (in the very far North East of China). Harbin has a comprehensive industrial system that manufactures power equipment, aircraft, electronics, chemicals, and more. Harbin Electric Company Limited is one of the three largest manufacturers of power plant equipment in China, producing steam turbines and generators. So it also makes sense that the city nurtured the first Chinese industrial robot prototype, the "JR-1," which was developed in 1979 at the Shenyang Institute of Automation under CAS.

  You may have heard of Harbin for tourism reasons, as it has a famous annual ice sculpture festival that attracts millions of visitors annually. But I’ve never been, as I’ve been “wintered out” after my four years in Edmonton. If interested, you can look into the HIT Robot Group, a JV between a private company, the local provincial government, and the Harbin Institute of Technology, which specializes in industrial robotics and intelligent equipment.

• Prototype Development Phase (1990-2000): During this period, China focused on developing indigenous robot prototypes while beginning to import industrial robots from international manufacturers like ABB, KUKA, and FANUC. Many of these mentioned were European-homegrown and are now bought out (or attempted to be bought out) by Chinese firms. Research institutes and universities led most development efforts, with limited commercial applications.

• Early Commercialization Phase (Late 1990s-2000): The late 1990s saw the emergence of China's first robotics companies, including Siasun Robot & Automation Co. (founded in 2000), which grew out of the Shenyang Institute of Automation. These early companies primarily focused on industrial automation applications.

• Mass Industrialization Phase (2001-2010): As China's manufacturing sector expanded rapidly, the demand for industrial robots grew substantially. This period saw increased adoption of robotics in automotive manufacturing, electronics assembly, and other industrial applications. However, most robots were still imported from foreign manufacturers.

• Ultra-Rapid Development Phase (2011-Present): Since 2011, China's robotics industry has experienced explosive growth. In 2013, China became the world's largest market for industrial robots, surpassing Japan and South Korea. The government's "Made in China 2025" initiative, launched in 2015, identified robotics as a key strategic industry, accelerating development through policy support, funding, and research initiatives.

Prior to the 2010s, China lagged significantly behind established robotics powers like Japan, Germany, and the United States in core technologies such as precision components, control systems, and software. In most industrial areas, it largely depended on imports, and imported machinery was seen as much more premium in quality and precision than the ones made domestically. That changed in the mid-2010s.

C. Manufacturing Ecosystem: Scale & Vertical Integration

However, China's manufacturing prowess comes from grand infrastructure, cheaper labor, and decades of practice. The nation’s manufacturing capabilities, whether in renewables, automobiles, textiles, or industrial hardware, give it an advantage in outpacing the U.S. in production if necessary.

China’s edge in robotics begins where most machines are born: the workshop itself. Decades of building everything from textiles to EV batteries have woven a dense industrial fabric—suppliers, component makers, tool-and-die shops—often within a short truck ride of one another. That proximity lets robot start-ups whip through prototyping cycles in days, not months, while established players tap the same network to ramp production fast. Many firms keep design, gearbox machining, servo assembly, and final testing under one roof, squeezing out middle-man mark-ups and tightening quality control. The result is that a six-axis arm or a bipedal prototype can roll off the line at 30-50 percent less than a comparable Western build—an advantage that helps explain why China installs more factory robots each year than the following four countries combined.

Batteries Powering the Future
A robot is only as helpful as its last charge, and China owns roughly three-quarters of the world’s battery-cell capacity. Know-how transferred from the electric-vehicle boom is now reshaping robotics. Higher-density chemistries stretch run-times; flexible, custom-shaped packs free up designers to slim torsos and limbs; and sheer manufacturing scale keeps costs on a downward glide path. Equally important are innovative battery-management systems—often written by the same teams that once tuned EV packs—that monitor temperature and load in real time, squeezing out extra cycles and boosting safety on the factory floor.

Sensors, Actuators and AI: Eyes, Muscles and Brains
Low-cost depth cameras, LiDAR units, and environmental sensors—many sourced domestically—feed robots a richer data stream without blowing the bill of materials. Paired with lighter, more precise servo motors and linear actuators, these “eyes” and “muscles” translate into smoother pick-and-place moves or steadier bipedal gaits. Layer on China’s fast-evolving AI stack—edge chips for perception, cloud back-ends for continuous learning—and robots improve in the field, not just on the drawing board. Supportive technologies such as 5G and industrial-grade IoT networks round out the package, letting fleets report status or receive new motion policies over the air.

Supply-Chain Depth: From Rare Earths to Final Freight
Behind the glossier tech lies a less visible but critical moat: materials and logistics, which are now also at the forefront of the trade discussions between China and the U.S.

China controls about 60 percent of global rare-earth output, giving domestic motor and sensor makers privileged access to neodymium and dysprosium. Specialty semiconductor fabs—while still catching up at the bleeding edge—have already pumped out the motor drivers and AI accelerators that robots require. With component vendors, contract manufacturers, and ports clustered along the same coastal corridors, lead times shrink and inventories stay lean. The concentration also cushions shocks: if one supplier stumbles, another is often a city, or sometimes a city block, away. For robot builders racing to hit price points and production quotas, that resilience is its form of innovation.

And together with these seemingly not-so-directly related sectors, China’s embodied AI sector comes to life.

According to industry research, China controls approximately 63% of key companies in the global supply chain for humanoid-robot components, enabling significantly lower production costs and faster time-to-market.

As mentioned, it wasn’t until the 2000s that China made significant breakthroughs in critical robotics components such as motion control, high-performance servo drives, high-precision reducers, and sensors. Domestic manufacturing of these components has gradually replaced imports, achieving precision levels comparable to international standards. A stable and well-developed domestic supply chain has supported this to come to fruition.

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D. Current Robotics Market Snapshot

China now runs the world’s most extensive installed base of factory robots—roughly 1.7 million units, up from 133,000 in 2013. That inventory translates to about 470 robots for every 10,000 manufacturing workers, a density that edges out Germany and Japan. Annual installations remain brisk: 290,000 new units in 2023, or just over half of the global total. Domestic production is catching up, too; Chinese firms turned out 443,000 units last year and claimed nearly a third of their home market, a steep climb from a single-digit share a decade ago. Even with softer exports and patchy consumer demand, the sector has managed to compound at roughly 20 percent a year since 2014, according to the International Federation of Robotics.

Most of those machines still cluster where speed and precision pay immediate dividends. Electronics assembly leads the pack, at about 77,000 robots installed in 2023 for fastening, testing, and packaging circuit boards and handsets. Auto plants follow with roughly 65,000 units, handling everything from welding to paint. Heavy-metal fabrication sits in third place, while plastics and chemicals are gaining ground as injection-molding cells automate picking and stacking. Even food and beverage lines are joining in, nudged by tighter hygiene rules and rising labor costs.

BUT they don’t look like humans, not yet.

These robots, mostly articulated six-axis arms, act as strong workhorses in the process, holding around half of all sales and dominating welding and general handling tasks. These industrial-use robots shuttle parts, assemble equipment with precision, and move heavy loads in warehouses on and off the assembly line across manufacturing plants.

Not until the recent 10 years did foreign names still set the technical benchmark—FANUC, ABB, KUKA (now owned by Chinese Midea), and Yaskawa hold just under 70 percent of the Chinese market. Yet local challengers are closing in. Chinese robotics company, Siasun, offers a broad catalog with Estun and Efort focused on articulated arms for carmakers. Home-grown builders started to take over some market share starting in 2010, and by 2015, when Made in China 2025 was launched, volumes of local supply went into full gear and started to take over imported makers. From 2020 onwards, with the development of connectivity, AI embodiment, and 5G networks, Chinese robot makers are leveraging rich databases and favorable policies, and have started to take over as the global innovation leaders. In short, the gap is narrowing more quickly on cost than on absolute performance, but the trajectory favors deeper domestic share.

E. Humanoid and Quadruped Robot Development

For many years, robotic arms have been programmed to help in industrial settings, mostly completing pre-programmed and repetitive tasks. Today, these robotic companies are making human-looking robots empowered by AI in hopes of actually replacing or supporting human labor in challenging tasks in labor-intensive manufacturing.

The WSJ recently wrote, similarly to what I wrote previously, that this is the convergence of technology that China has planned strategically over the decades, largely pushing forward with friendly policies and subsidies. So let’s take a look at how exactly China’s robotics sector is looking…

Source: Morgan Stanley Humanoid Robotics Report

Embodied AI Robots

We’ve explored quite a bit about China’s humanoid robots on AI Proem, from the star company Unitree to the other start-ups offering robot maids and robot girlfriends.

“The United States invented robotics, but like so many other industries, it lost leadership to foreign competitors,” said Robert D. Atkinson, president of ITIF and author of the report. “Companies in many other nations were willing to invest for the long haul. Now, America will not restore its robotics industry if most of the demand for robotics is outside the U.S., especially as China catches up.”

The industry's growth has been fueled by a powerful combination of factors: strategic government policies, manufacturing ecosystem advantages, cross-industry technological synergies, academic-industry collaborations, and substantial investment. China has leveraged its manufacturing, battery technology, and electronics strengths to create a robust foundation for robotics innovation while simultaneously developing cutting-edge capabilities in humanoid and quadruped robots.

And I keep going back to Made in China 2025, whose goal was made explicit: Beijing wants “initial mass production of general-purpose humanoid robots” by 2025, with subsidies and AI and robotics pilot zones across the nation, spanning 11 cities from North to South, East to West.

The working-age population continues to shrink in China, raising serious concerns for economic planners. Factors include an aging population, but also a reluctance in the younger generation that is choosing to work in service industries and live in urban areas over factories, which has made the traditionally known “cheap labor” not so cheap anymore.

Today, enhancing automation in manufacturing is not just a federal-level priority, but for many, it is a firm-level priority. Engineers at UBTech are trying to train robots to sort auto parts and move containers to help with the labor shortage in mundane tasks.

Tech Diffusion

In many ways, the Chinese government has followed what Professor

Jeffrey Ding

, author of Technology and the Rise of Great Powers: How Diffusion Shapes Economic Competition, has written: successful diffusion requires robust institutional adaptations, including education, workforce training, governance, and infrastructure that support the absorption and scaling of new technologies. Ding highlights that long-term leadership emerges from patient, strategic investments in these foundational elements rather than reactive, short-term competition or military rivalry. So in that case, we can see the robotics industrial evolution has taken decades of iteration, learning, and planning to reach the level of maturity it has reached now.

However, in the case of embodied AI, China may be adopting it at a far faster rate than the U.S.

Following Ding’s framework, China has done so to lead in robotics. Manufacturing, as a core GDP contributor, has trained millions of skilled workers. As we have also written extensively about, national-level to provincial and municipal policies have pushed forward robotics development through a series of Five-Year Plans, and the infrastructure build-up across tangentially related industries has also been prioritized.

And China is very clear on its advantages and disadvantages. Despite still lagging in the most advanced chips, it has been leveraging its manufacturing capabilities and doubling down on physical AI. From robots to embodied AI EVs, China has produced some of the most advanced and cheapest models that are being sold globally. As

JS Tan

puts it in his comparison of China and the U.S.’s labor structure, “The shift from software to manufacturing represents more than just a sectoral rebalancing—it signals a potential return to an economy rooted in production.”

In fact, since the 2018 trade tariffs, China has been increasing its ability to be self-sufficient in many advanced tech sectors. In the case of robotics. Qiao Hong, at the Chinese Academy of Sciences and director of a laboratory of multimodal artificial intelligence systems, said domestic humanoid robots have seen continuous technological advancements in fields from component manufacturing and machine tool processing to control systems, and are now aligning with internationally advanced standards, according to China Daily.

"By combining these technologies with well-developed, independently built robotics supply chains, the country has established a solid foundation for final complete system integration," Qiao added.

"Over 95 percent of the components in our full-size humanoid robots are now domestically produced," said Zhang Dapeng, an executive at Shenzhen, Guangdong province-based humanoid robotics company Leju (Shenzhen) Robotics Co Ltd.

Market Growth and Projections

In some ways, this prioritization could also be cultural. This take could be a bit controversial, but I think there is an embedded belief by the average person that just does not get why you need to pay for something you cannot touch - in Chinese, uncles often like to scold kids by saying what they’re doing is “虚 (xu)“What does that mean? It means “empty or vain,” but it’s not that simple. The word means it’s not tangible, unreliable, or practical in an economy built up by people who made THINGS, like auto parts, textiles, and toys, to today’s EVs, home appliances, and robots. Software just seems “xu,” it is for free use, and the objective of the software should probably lead you to something that is “实 shi,” real, practical, tangible, and touchable. And what is more real than robots and machine humans taking over the heavy lifting of the laborious economy?

As of 2023-2024, China accounts for over 50% of global industrial robot installations according to China Briefing, with robot density surpassing major industrial nations like Germany and Japan. Domestic manufacturers now hold nearly half the market share, reflecting strong indigenous innovation and production capabilities. Based on Morgan Stanley’s recent Humanoid Robotics report, China is far ahead in the lead of new humanoid robot models, followed by the U.S./ Canada.

Source: Morgan Stanley Humanoid Robotics Report

On the Big Technology Podcast, Ranjan Roy and

Alex Kantrowitz

discussed China’s humanoid robot marathon, which took place in Beijing last month. And in many ways, perhaps we don't need humanoid, human-looking robots, as it may be a bit egotistic of humans, and could not be the most efficient. There is a novelty around humanoid robots because they can fit into our existing world more easily. Rajan goes on the pod about how incredible the technology is with his DJI drones; they’re not only cheap but also just very high quality. (And thank you for the shout-out to my analysis.)

While I agree, humanoid robots currently seem a bit gimmicky. But beyond the headline hype, China's humanoid and quadruped robots sector is indeed experiencing rapid growth. The current humanoid robot market is projected to reach RMB 75 billion (USD 10.3 billion) by 2029 and potentially RMB 300 billion (USD 41.3 billion) by 2035, according to state-backed media China Daily’s report. In addition, industry forecasts suggest China is well within plan with its 2025 goals and could have 59 million humanoid robots in operation by 2035.

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Based on Morgan Stanley’s humanoid robotics research, 56% of the world's publicly traded humanoid robotics companies are based in China, and 61% of global robotics unveilings since 2022 have come from Chinese companies. And just looking at the first two months of 2025 alone, Chinese humanoid robotics startups raised US$276 million across 20 deals, compared to US$176 million in four transactions during the same period in 2024.

Major Players in Humanoid Robotics [see pieces I’ve written before]

• Electric Dreams, Robot Reality: China's EV-to-AI Evolution

• Physical AI’s ChatGPT “moment”: A Closer Look at Embodied AI Robots

• Robot Girlfriends, Robot Firefighters, Robot Dogs, Robot Maids and Beyond

Ok, let’s start wrapping this piece…

F. China’s Directional Policies

Hardware Advantage and Production Velocity

People like to always say China’s growth is all state-driven or directed. But it’s both yes and no. At a top-down level, there has been incredible support and encouragement to grow the AI and robotics industry. However, entrepreneurship and self-driven innovation have also played a significant role.

Policy Architecture: Beijing’s Roadmap for Embodied AI

The state has scaffolded that hardware momentum with an unusually dense policy support, and undeniably, these have played the most significant accelerators:

• 14th Five-Year Robotics Plan (2021-25): The Ministry of Industry and Information Technology’s five-year blueprint calls for breakthroughs in “brain, cerebellum, and limb” technologies and for the formation of three to five globally competitive robot clusters.

• Made in China 2025: Robotics sits among ten “strategic” sectors where import reliance must fall and domestic market share must rise; recent reviews show the programme has already narrowed many hardware gap.

• “Robotics+” Application Action Plan (Jan 2023) — Co-signed by MIIT and 17 other agencies, the plan bankrolls deployments in factories, warehouses, hospitals, and consumer services, ensuring an on-shore demand pipeline for early-generation humanoids.

• Government Work Report (March 2025): The latest major push came from the top down. China’s premier annual policy address listed embodied intelligence alongside quantum tech and 6G as future industries eligible for increased funding and pilot zones, locking humanoids into the national innovation budget, according to NPC Observer.
  

China’s humanoid and quadruped builders have also been battling it out domestically in a fierce competition of technology and price competitiveness. As mentioned, the price edge means that finished machines typically sell for 30-50 percent less than comparable Western models, a gap rooted in shorter supply chains and aggressive component integration, according to ITIF. Lower sticker prices, in turn, widen the customer pool and justify larger production runs. Firms such as Unitree, Fourier, and Agibot already plan thousands of units a year. Just Unitree alone expects domestic makers to ship more than 1,000 humanoids in 2025, while Agibot targets 5,000 units; these numbers still seem aspirational in the United States or Europe.

Together, these layers push capital toward both high-volume factories and component R&D, while the local government grant system offers subsidies to early adopters on everything from reducers to cloud-robotics subscriptions. The result is a feedback loop: cheaper parts enable bigger production runs, which generate more field data, improve AI policies, and still attract more customers. And you can say, policy may have proven as decisive as engineering in China’s race to mainstream humanoid robots.

G. Conclusion: Progress with Imminent Challenges

The overarching geopolitical tension between China and the U.S. makes the advancement of these technologies more scrutinized. Although many are for commercial use, the advancement of robotics, especially embodied AI robotics, has now been labeled a national security issue.

Limits are at the technical and potential economic levels. AI chips, for one, are one of the biggest hurdles the industry faces in China. Precision gearboxes, high‑end sensors, and purpose‑built AI chips remain bottlenecks, leaving builders reliant on imports for the most exacting components. At home, regulators are only beginning to draft safety and performance standards for free‑roaming humanoids, a process that must keep pace with rapid deployment. Economically, the country will have to shepherd displaced workers into new roles as automation scales, a social‑policy challenge as technical as the robots.

Finally, each new cohort of machines adds to demand for electricity, rare‑earth magnets, and battery metals—resources already under pressure from the EV and renewables booms. This forces planners to balance industrial ambition with energy and materials security.

China's robotics industry has grown from early experimental efforts in the 1970s to become the world's largest and most dynamic robotics market. And as China continues to advance its robotics capabilities, the industry is poised for further growth and global influence. The combination of technological innovation, manufacturing prowess, policy support, and entrepreneurial dynamism suggests that China will (for now) remain at the forefront of the worldwide robotics revolution for the foreseeable future.

But again, real-scale usage of humanoids across workplaces? Probably not for another ~3 years at least, I’d say.

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