China is rapidly developing its humanoid robot industry, a move that has raised concerns in the United States and caught the attention of Elon Musk. Currently, over 140 companies in China, primarily located in Shenzhen and Suzhou, are engaged in the manufacturing of humanoid robots. Since late 2024, Chinese cities such as Beijing and Shenzhen have established investment funds totaling more than $26 billion to support this burgeoning industry.
Local governments are implementing various incentives, including providing free land, reducing office rental costs, and contributing approximately 10% of the purchase price of each robot to encourage buyers. This approach mirrors China”s previous strategy with electric vehicles, where government subsidies helped domestic brands like BYD gain market share at the expense of established players like General Motors and Volkswagen.
Beijing has identified “embodied AI,” which integrates artificial intelligence with physical robots, as a key technology to dominate over the next five years. Musk highlighted China”s competitive edge during Tesla”s Q4 earnings call, stating, “China is an ass-kicker, next level.” He emphasized that, to their knowledge, there are no significant humanoid robot competitors outside of China.
Chinese manufacturers recorded over $300 million in orders for humanoid robots in the latter half of 2025, with projections from Morgan Stanley suggesting that up to 100,000 units could ship in 2026. Notable companies like Shenzhen-based UBTech are already securing deals with major organizations such as Texas Instruments and Airbus. Government agencies are among the early adopters, deploying robots in various environments, including museums and public events, which allows these companies to gather valuable data for improvement.
UniX AI, a firm based in Suzhou, operates with around 100 employees and offers wheeled humanoids starting at $12,600. These robots are currently employed in numerous hotels across China, performing tasks such as adjusting bed linens, collecting garbage, and operating laundry machines. Fred Yang, the founder of UniX AI, noted that an impressive 80% of their parts can be sourced from suppliers within a short distance, enabling fast and cost-effective modifications.
Yang commented, “Policy is one of the decisive reasons that embodied AI is doing so well in China,” highlighting the support from local governments, which often offer free land and office space for extended periods.
Shenzhen has established a “Robot Valley” housing around 15 robotics firms and has initiated a $1.4 billion fund dedicated to AI and robotics, alongside a separate $640 million fund specifically for AI models. In total, Beijing has assembled $14 billion in funds for similar initiatives.
However, the rapid growth of the robot sector also presents potential risks reminiscent of the electric vehicle market. An oversaturation of brands could lead to fierce competition, price collapses, and financial difficulties for many companies. In response, the Chinese government is formulating technical standards aimed at eliminating weaker firms and accelerating the adoption of robotics.
While the United States maintains a lead in the AI technologies that power these robots—relying on firms like Tesla, Boston Dynamics, and Agility Robotics that use components from Nvidia and Google—challenges remain. American companies find themselves increasingly dependent on China”s supply chain. For instance, Tesla”s Optimus robot is expected to utilize Chinese suppliers for critical components, such as roller screws and motors.
Jonathan Beh, from an industrial park in Singapore, remarked on the state of the market, stating, “Although we”ve heard of American robot companies, they”re not in the market. Chinese companies have great products, and they”re the only available option.” In light of these developments, the White House is reportedly crafting an executive order aimed at bolstering the American robotics sector. Yet, China”s head start in manufacturing, bolstered by substantial government funding, presents a formidable challenge that may prove difficult for the U.S. to overcome.
This initiative aligns with China”s broader ambitions to lead in emerging technologies, including a concerted effort to control AI chip manufacturing amid U.S. export restrictions and significant investments in quantum computing over the past two years.
