The robots are coming. But will they come from China?
20 May 2025
As the hype around artificial intelligence gives way to the search for commercial applications, the field of robotics is attracting renewed attention. Amid heightened market volatility, securities financing can unlock funding for investors and entrepreneurs looking for promising avenues of future growth.
In the US, tech giant Tesla raised the sector’s profile by betting heavily on the technology, planning to produce thousands of its Optimus humanoid robots this year.[1] Calling it the “biggest product of all time by far”, Tesla CEO Elon Musk has even predicted there will be at least 10 billion humanoid robots in action by 2040.[2]
But China has become the center of industry buzz in recent months. In January, Unitree Robotics — famous for its robotic dogs — stunned audiences during the Spring Festival Gala when its 1.8-meter-tall H1 robots performed a folk dance.[3] The firm followed up with viral videos of its humanoids executing complex routines like tai chi and backflips.[4] In April, 21 humanoid robots built by various Chinese start-ups even joined a half-marathon in Beijing, racing alongside human participants for the first time.[5]
This robotics boom is no accident. China not only leads in global manufacturing — from electric vehicles to solar panels — but also has one of the world’s lowest fertility rates at just 1.09 children per woman in 2022 below the replacement rate of 2.1.[6] China is also ageing fast: its over-60 population is expected to grow from 280 million to more than 400 million by 2035.[7]
That’s why investment in China’s robotics industry is surging, despite a sluggish economy and in the face of rising US tariffs. In the first two months of 2025 alone, humanoid robot developers raised nearly 2 billion yuan (US$276 million), up from 1.2 billion yuan the previous year.[8]
Humanoids capture the imagination, but specialized robots are key
While humanoid robots garner headlines, the near-term growth lies with specialized robots capable of automating specific tasks. China already accounts for more than half of all industrial robots installed annually.[9] This strength in automation infrastructure positions the country well for the next phase: commercial robots tailored for specific tasks at homes, hospitals and for non-industrial purposes.
Producing humanoid robots at scale is expensive. Also, despite advances in large language models, reasoning and situational adaptability remain limited.[10] Safety is another barrier — extended usage requires large battery packs, making the robots heavy and potentially hazardous.[11] As a result, specialized robots[12] — cheaper, more adaptable, less intelligent and likely resembling pets more than people — are seeing soaring demand at Chinese trade shows.[13]
China’s robotics focus in 2025 is shifting toward producing such robots. In the first two months of the year, Chinese factories produced nearly 1.5 million service robots for tasks like delivery and cleaning, a 36%year-on-year increase.[14] Elderly-care robots alone are forecast to grow from a market size of 7.9 billion yuan last year to potentially 1 trillion yuan (US$138 billion) in the coming years.
As the technology improves, Chinese robots are expected to handle increasingly complex tasks, raising productivity and margins across sectors. These robots have the potential to dominate worldwide exports — mirroring China’s success in EVs, solar panels, drones and many other technologies.[15]
This expansion comes at a time when many countries are grappling with shrinking populations. According to UN projections, two-thirds of humanity now lives in nations with declining birth rates. By 2100, populations in some major economies could fall by as much as 20 to 50 percent.[16] Robot labor may be a demographic necessity.
Of course, there will be challenges along the way. Chinese robots, while cost-effective, often rely on less advanced algorithms for motion control and precision.[17] Regulatory scrutiny and rising competition from global start-ups are also potential risks to their international growth prospects.
Chinese firms have overcome similar challenges in other sectors, however, and net growth in China’s leading industries like AI and machine learning specialists is above the global average.[18] Meanwhile, China plans to raise 1 trillion yuan (US$138 billion) in capital from local governments and the private sector over 20 years which will ensure ample capital support from within the country.[19]
Morgan Stanley estimates that a billion humanoid robots could be in use globally by 2050.[20] For investors and entrepreneurs seeking long-term exposure to transformative technologies, the rise of China’s robotics industry offers compelling potential.
Flexible, securities-backed financing can provide the liquidity needed to seize this emerging opportunity and support automation in societies around the world.
[1] https://www.inc.com/minda-zetlin/elon-musk-is-literally-building-a-legion-of-robots-he-says-theyll-change-everything/91169741
[2] https://www.reuters.com/technology/elon-musk-10-billion-humanoid-robots-by-2040-20k-25k-each-2024-10-29/
[3] https://www.youtube.com/watch?v=hrjxmJWo3IY
[4] https://www.youtube.com/watch?v=Nkh6RUocD8c
[5] https://www.reuters.com/world/china/china-pits-humanoid-robots-against-humans-half-marathon-2025-04-19/
[6] https://www.wsj.com/world/china/chinas-fertility-rate-dropped-sharply-study-shows-e97e647f
[7] https://www.reuters.com/world/china/chinas-population-falls-third-consecutive-year-2025-01-17/
[8] https://www.scmp.com/tech/tech-trends/article/3301571/chinas-robotics-start-ups-emerge-new-venture-capital-darlings
[9] https://ifr.org/ifr-press-releases/news/china-to-invest-1-trillion-yuan-in-robotics-and-high-tech-industries
[10] https://www.technologyreview.com/2025/05/06/1116108/why-the-humanoid-workforce-is-running-late/
[11] https://www.bbc.com/news/articles/c62jxdxng7do
[12] https://fortune.com/article/specialized-robots-not-humanoid-robots-will-dominate-robotics/
[13] https://www.scmp.com/economy/china-economy/article/3307697/why-chinas-robot-makers-are-unfazed-us-tariffs-were-only-supplier
[14] https://www.scmp.com/tech/policy/article/3302720/china-debuts-economic-data-service-robots-humanoid-industry-grows
[15] https://www.rand.org/pubs/commentary/2025/02/focus-on-the-new-economy-not-the-old-why-chinas-economic.html
[16] https://www.mckinsey.com/mgi/our-research/dependency-and-depopulation-confronting-the-consequences-of-a-new-demographic-reality
[17] https://orcasia.org/article/562/chinas-robot-revolution
[18] https://www.weforum.org/stories/2025/04/the-future-of-jobs-in-china-the-rise-of-robotics-and-demographic-decline-are-opening-up-skills-gaps/
[19] https://ifr.org/ifr-press-releases/news/china-to-invest-1-trillion-yuan-in-robotics-and-high-tech-industries
[20] https://www.investing.com/news/stock-market-news/humanoids-seen-as-5-trillion-global-opportunity-at-morgan-stanley-4010886
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