China’s robots are coming of age

Robots are coming, whether we like it or not. Recent advances in artificial intelligence (AI) are making significant strides in “humanoid robotics.” For many researchers, the goal is to leverage brain-inspired neural networks to develop machines that mimic human anatomy and performance. Not surprisingly, much of the research into autonomous, multimodal robots is aimed at replacing human labor.

The robotics industry is reaching a tipping point. Once confined to repetitive tasks in industrial factories, robots are now increasingly capable of learning from generic data to perform complex human tasks. Unlike specialized industrial robots, humanoid robots can be designed for general-purpose applications in a variety of work environments. This includes agriculture, manufacturing, mining, healthcare, education, entertainment, and even defense.

Germany and Japan are the current market leaders in this area, but China is quickly catching up. In 2022, Japan accounted for 45% of global industrial output and 36% of global exports, but China had already become the world’s largest consumer of robots, accounting for more than half of all machines installed. By 2024, China leads the world in robotics patents, although it remains dependent on foreign companies. In fact, most large Western robotics firms have operations in China due to the scale of its market.

China’s rise is by strategic design

Last year, a report by China’s Ministry of Industry and Information Technology (MIIT) focused on guiding the development of the country’s robotics industry through generous subsidies and tax incentives. Although China still lags behind in software and hardware, its robotics industry is well positioned to advance up the global value chain. Under its “robotics +” action plan, Beijing seeks to accelerate the application of robots in various industries.

Not surprisingly, Chinese planners hope to control the global supply of key components for the robotics industry by 2025 and achieve global dominance in humanoid robot manufacturing by 2027, according to The Robot Report. In China’s slowing economy, the MIIT describes robots as a “new engine of economic growth.” Robot sales figures suggest China is aggressively pursuing job automation. Greater automation is essential to boost productivity, given a simultaneously aging and shrinking population.

Overall, China’s main advantage in the robotics industry remains low-cost manufacturing. The country’s domestic companies lag behind their foreign rivals in smart manufacturing equipment, industrial software and operating systems. But many Chinese firms have developed “good enough” alternatives that can cost as little as one-fifth of the machines sold by their Western competitors. Indeed, China’s industrial policies are deliberately aimed at rapidly expanding a range of high-tech sectors through advanced manufacturing.

Can the United States and Canada compete?

Will American companies be able to compete in this new industry? It’s hard to say. The United States still leads the world in software design, but Asia has emerged as the industry’s main driver, with 73 percent of robots installed. The Chinese government has become particularly effective at encouraging manufacturers to locate near research centers to adopt cutting-edge innovation. These efforts are aimed not only at improving domestic productivity, but also at positioning China as a major player in manufacturing and services automation.

While the United States generally performs well in innovation, it lags in application. According to a report by the Information Technology and Innovation Foundation, the United States does not have a coordinated national innovation system. In fact, its overall innovation system has been deteriorating for decades. China currently accounts for a staggering 35% of global manufacturing compared to the United States’ 12%. In 2022, the United States had a $1.26 trillion trade deficit in robotics, with exports accounting for just 28% of the value of imports.

As Chinese tech companies move up the software value chain, Western policymakers will need to get much better at industrial planning. As in so many other frontier industries — telecommunications, aerospace, advanced electrical equipment, high-speed rail — Chinese planners have become adept at combining strategic industrial policies with patient investment.

Getting industrial policies right

In August 2022, several Chinese government ministries, including MIIT, issued a joint statement on the application of robots in a variety of industries, including agriculture, construction, healthcare, and mining. Of course, robotics remains just one piece in a vast mosaic of public investments in high-risk industries. The “Made in China 2025” industrial policy, launched in 2015, underscores the country’s commitment to becoming a global leader in innovation.

Given the size and scope of the Chinese technology market, Canadian policymakers would be wise to become more aware of China’s industrial planning, particularly its robotics industry. Despite decades of innovation policy and planning, Canada remains near the bottom of its peer group in innovation. If Canadian manufacturers have any hope of competing in the global innovation economy, this must change.

Activity subsidized by the Secretary of State for Foreign and Global Affairs