10 Reasons China Is Leading the Robot Race

Morgan Stanley says China is “executing a playbook” for robotics success much like its earlier “Made in China 2025” industrial strategy — but this time, the focus is AI-powered robots, drones, humanoids, and autonomous systems. In a new report, the firm outlined 10 key reasons why China is now the frontrunner in the global robotics race.

Here’s a breakdown of their case:

Rare Earth Control – China controls 65% of rare earth mining and 88% of refining, essential for EVs, defense, and robotics. Morgan Stanley warns that Western firms are “only now waking up to this bottleneck.”
Tech Transfer from West – Decades of joint ventures brought Western manufacturing secrets into China. Now, “China’s auto sector has arguably lapped the West in tech and efficiency.”
Government-Funded Innovation – China’s massive Government Guidance Funds (GGFs) have created internal competition similar to Silicon Valley, accelerating progress in batteries, robotics, and AI.
Military-Civil Fusion – Dual-use technology, like drones, benefits both military and commercial sectors. DJI alone controls 70% of the global drone market.
Aging Population = Robot Boom – With demographic decline looming, China is incentivized to scale physical AI fast. Morgan Stanley notes a “virtuous loop” of data, hardware, and manufacturing is in motion.
Public Excitement – Humanoid robots star in dance shows, boxing matches, and marathons. The public is engaged and hyped — a key factor in mass adoption.
Vocational Education Surge – China trains 35 million students across 11,000+ vocational schools, versus fewer than 1 million in the US.
Tax Perks for Innovation – A “super deduction” lets companies write off 200% of R&D spending, turbocharging innovation at the enterprise level.
Top-Tier Infrastructure – With 4.8% of GDP spent on domestic infrastructure, China outpaces every other country, directly feeding manufacturing efficiency.
Strategic Patience – While US firms often chase short-term wins, China plays “the long game” — likened to its ancient game of Weiqi (Go) — outmaneuvering rivals over decades.

The bottom line? According to Morgan Stanley, China isn’t just catching up — it’s already ahead. And if trends hold, its lead in robotics may be “very hard to reverse.”