China’s robot mania ignites another zombie outbreak

Humanoid robots are the latest manufacturing craze in China. The playbook resembles the early days of the country’s electric vehicle, or EV, breakthrough that morphed into massive overproduction. A flood of low-cost exports has since swept across the world.

Similar fears are surfacing as state subsidies pour into the “embodied intelligence” sector. Last week, the ruling Communist Party rolled out its 15th Five-Year Plan. AI-controlled robots topped the agenda at the National People’s Congress.

By 2030, China aims to be the “world leader” in frontier research and development. Humanoids are expected to replace a dwindling labor force in factories and boost efficiency. They will also be used across a wide range of service sector jobs.

“Artificial intelligence related industries will be valued at more than US$1.45 trillion [in the next five years],” Zheng Shanjie, the head of China’s highly influential National Development and Reform Commission, told the state-run Xinhua News Agency.

“The AI Plus initiative includes a target of integrating artificial intelligence into 90% of China’s economy by 2030,” he said.

The gap between capacity and market demand … is widening.

China Business Spotlight

AI rules, OK:

• There are between 129 and 137 EV and plug-in hybrid brands. Only around 15 will be financially viable by 2030, according to Reuters. Most will end up as zombie companies.
• In humanoid robotics, there are 140 firms manufacturing 330 models, Humanoid Robotics Technology pointed out. Most survive on government subsidies.

Delve deeper: “China is already moving toward overproduction. Government subsidies and private capital are driving the rapid expansion of new factories. This is widening the gap between capacity and actual market demand,” China Business Spotlight stated.

Big picture: There are other issues at play in the AI race. “Safety standards, data rules and supplier screening will become trade issues, not just security issues,” Marina Yue Zhang, of the University of Technology Sydney, said.

Bottom line: “The stakes are high,” she wrote in The Conversation last month. 

China Factor comment: Beijing appears to hold all the chips in the emerging android era. Up to 90% of core components are embedded in Chinese supply chains. But like the EV and green energy boom, the zombies are lurking in the background.