Bubble trouble is brewing in China’s robot land
Industrial hype hits an economy mired in a manufacturing slump, rising unemployment, and anemic growth
Bubble trouble is stirring in China as the economy reels from a record-breaking manufacturing slump. Factory activity shrank for an eighth straight month in November, according to official data released by the National Bureau of Statistics over the weekend.
The numbers highlighted weak domestic demand, fallout from the real estate crisis and rising unemployment, particularly among Gen Z or Zoomers. Juicing up the economy with state money has failed to hide a productivity downturn and anemic growth.
As the dark clouds roll in, there are also serious concerns about the hype over Chinese AI robotics stocks. “Speed and bubbles have always been issues,” Li Chao, a spokesperson for the National Development and Reform Commission, told a media briefing in Beijing last week.
“They need to be grasped [to] balance the development of cutting-edge industries,” she said, emphasizing the need to avoid flooding the market with similar products, instead of boosting research and development.
[The EV] sector was also hit by a price war and massive overcapacity.
That’s entertainment:
- “Can everyone dial it down a little with the enthusiasm for humanoid robots that can’t even do anything useful yet,” Gizmodo reported.
- “You’re scaring the Chinese economy,” the online site, which covers technology, science and internet culture,” pointed out in response to Li’s comments.
Delve deeper: Beijing is no stranger to “bubbles.” More than a decade ago, the bike-sharing craze descended into a road crash. Earlier this year, the electric vehicle sector was also hit by a price war and massive overcapacity.
Between the lines: “Fears are growing [that] the auto industry faces an ‘Evergrande moment.’ This was a reference to the collapse of the real estate group that tanked China’s property sector,” China Factor reported in May.
Big picture: Yet this comes at a time when the overall state of the world’s second-largest economy is mired in debt and deflation. Last month, a Bloomberg News analysis showed that “deflation on the ground was more pronounced than official data” showed.
China Factor comment: President Xi Jinping and his ruling Communist Party have always relied on opaque practices and state subsidies to fuel the green tech drive and export boom. With dwindling tax revenue and consumer confidence flatlining, that might not be enough.