Warning from China: The robot bubble could burst

China has identified "embodied intelligence" as one of six key industries for 2030. To secure a leading position in this promising sector, the government is heavily supporting robotics companies. More than 150 firms are now developing humanoid robots – from young start-ups to major players like BYD and Xiaomi, which have recently entered the field. However, the country’s robotics boom also carries significant risks.

According to Reuters, the Chinese government has identified a stark gap between investment and actual demand. While robots are frequently showcased at trade fairs, they are rarely seen in factories or homes. Most models remain in early development stages and are suited only for testing. Another concern is the lack of differentiation – many humanoid robots look and function almost identically. As NDRC spokesperson Li Chao warns, a flood of "highly similar products" could overwhelm the market and push the industry toward an investment bubble.

The situation brings to mind China’s bike-sharing crisis that began around 2017, when millions of rental bikes were manufactured for companies like Ofo, only to end up unused and piled in scrap yards. A similar outcome could await the robotics sector if it fails to deliver truly innovative, market-ready products in time. Should the "robot bubble" burst, billions in investments could vanish overnight and many companies would likely collapse. In contrast, US firms like Tesla and Figure AI would stand to benefit, potentially tightening their grip on the global market.