Chinese automation feeds global stress and domestic poverty
Instead of focusing on the existing economic and social problems China is facing, strengthening manufacturing and exports has become Beijing’s overriding priority.
In a nutshell
- State-led automation boosts exports, pricing and manufacturing efficiency
- Supply-chain hegemony strengthens CCP control despite causing poverty
- Global markets are absorbing Chinese overcapacity and dumping
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On September 30, 2025, Ford Motor Company CEO Jim Farley – having just returned from China – warned that if the American automaker loses the competitive battle with its fast-growing Asian rival, it stands to lose everything. This is because China’s automotive technology has achieved comprehensive superiority while automated factories operating without humans have become the new norm. Beijing is leveraging the country’s growing number of automated factories to maintain dominance as the world’s top manufacturing power and continue its export-dumping practices, which will have domestic consequences.
The Chinese Communist Party’s (CCP) recently concluded Fourth Plenary Session of the 20th Central Committee sent mixed signals to the world.
The state will leverage its power – primarily through state-owned enterprises (SOEs) and centrally administered enterprises, supplemented by large private firms aligned with the ruling CCP – to further strengthen breakthroughs in science, technology and innovation, as demonstrated in the “Made in China 2025” initiative. This aims to elevate the technological sophistication of manufacturing and allow China to surpass the West in numerous sectors. A key manifestation of this is the rapid adoption of automation and unmanned systems in manufacturing.
This decision to focus on high-tech exports seemingly has its own rationale, but it is a huge gamble by President Xi Jinping. China’s leading elites have decided not to care too much about mounting problems at home such as deflation, stagnant domestic demand, the prolonged downturn in the real estate market or growing household and government debt. Instead, by making the export pie a larger share of the economy, they hope to compensate for the losses caused by local economic challenges.
The reality is that a significant portion of China’s population faces chronic unemployment, collective impoverishment due to the ongoing real estate downturn and severe shortages in social insurance and welfare. This trend is exacerbated by the increasing technological sophistication of China’s manufacturing sector, affecting not only the former middle class but also countless young people, migrant workers and university graduates. More critically, this collective return to poverty is entering a protracted cycle. It will undoubtedly endure for one or two generations, rivaling Japan’s 30-year stagnation.
Consolidating its supply-chain hegemony
The essence of the most recent plenary session was to declare that, according to the “Made in China 2025” agenda, China has achieved its target to surpass the West. China’s political elite harbors the ambition to comprehensively break free from Western restrictions in critical domains while focusing on maintaining hegemony as the primary supplier to global supply chains. Domestically, this aims to strengthen China’s fiscal situation and further entrench the CCP’s authority.
President Xi believes that to prevent a collapse of the communist regime in China like the fall of the Soviet Union, it is necessary to stick to communist dogma. While CCP leaders pay lip service to “improving people’s livelihoods” and “strengthening domestic circulation,” their true aspiration lies in securing a monopolistic position in global markets to guarantee a steady flow of future revenues.
To some extent, the global environment largely favors Beijing’s newly designated objectives. This is because the global economy as a whole is beginning to shift toward a slightly upward trajectory, despite the tariff wars initiated by United States President Donald Trump. Although the war in Ukraine persists, military conflicts in other regions have diminished. The tug-of-war between China and the U.S. has also eased somewhat. Consequently, economic development in many regions has returned to the forefront in light of the reshuffling of the existing globalized landscape.
It is precisely by leveraging this international demand that, through exports, China hopes that it can − at least for the next few years − compensate for the shortfall in its domestic demand. While China’s domestic electric vehicle (EV) market is fiercely competitive and showing weakness in terms of demand, its exports of EVs to Europe have surged throughout 2025, numbering over 2.3 million units.
China’s automatization
China’s industrial upgrade also benefits from another unique internal advantage historically unattainable in the capitalist world: robust infrastructure centered on its advanced digitalization, networking and ongoing development of artificial intelligence and big data. These advancements greatly facilitate automation and unmanned operations in Chinese manufacturing.
As robotics and automation were not highly developed in the 1980s and 1990s, many manufacturers in Western nations relocated their production lines to countries offering cheaper labor, lower energy and material costs as well as with more favorable environmental policies – such as China.
While this relocation under the banner of globalization reduced production costs for Western nations, it also resulted in the hollowing out of their domestic industries. Although China has experienced some minor relocation of its private enterprises, automation and unmanned operations have largely prevented the Western-style loss of industry.
The reality is that a significant portion of China’s population faces chronic unemployment.
Take Chinese-exported cigarette lighters as an example. China is the world’s largest lighter producer, manufacturing over 10 billion units annually. Approximately 60 percent are exported, capturing 95 percent of the global market share. Before automation, the cost per unit was $0.01; after automation, it fell by 85 percent.
China’s path of industrial advancement diverges from that of other market economies. Driven by state-will – specifically the long-term planning and relentless pursuit of goals by successive generations of CCP leadership – it acquired Western technologies through various means including theft, copying (including reverse engineering), and mergers and acquisitions. Simultaneously, the efforts of countless Chinese technicians have fueled continuous industrial upgrading, namely in unmanned operations. For instance, in 2016, China’s Midea Group acquired a majority stake in Germany’s KUKA. This automation company, originally based in Augsburg, Germany, began contributing to the manufacturing of Chinese industrial robots. It now supplies the Chinese market with industrial robots, autonomous mobile robots and automation solutions.
From 2020 to 2024, China’s value-added manufacturing increased from 26.6 trillion yuan ($3.77 trillion) to 33.6 trillion yuan ($4.76 trillion). During the 14th Five-Year Plan period (2021-2025), the incremental value-added in manufacturing reached 8 trillion yuan, contributing over 30 percent to global manufacturing growth, maintaining the country’s position as the world’s largest manufacturing economy for 15 consecutive years.
Robots doing the work in China
Nearly one-quarter of all industrial robots installed worldwide are deployed in China’s automotive manufacturing sector. Combined with electronics manufacturing, these two sectors account for roughly half of all industrial robot installations worldwide. It is conceivable that once full automation and unmanned operations are achieved, China’s manufacturing efficiency will increase further still, perhaps significantly. This also implies that over the next decade, China will supply the global market with lower-cost, high-quality products, widening the gap between most nations and China.
In less than a decade, China’s industrial automation has achieved remarkable progress. In 2024, China’s domestic industrial robot sales reached 302,000 units, making it the world’s largest industrial robot market for 12 consecutive years and supplying 43 percent of global volume. In 2024, China accounted for two-thirds of global robotics patent applications and is catching up with Japan in the manufacture of the machines. Industrial robots are now deployed across 71 major and 236 sub-sectors of the national economy, propelling China’s manufacturing robot density to third globally, only behind South Korea and Singapore, countries with much smaller populations.
Service robots are increasingly used in many other sectors, such as warehousing and logistics, commercial services, medical rehabilitation, elderly care and disability assistance. According to data from the International Data Corporation, Chinese manufacturers dominated the global commercial service robot market in 2024, accounting for 84.7 percent of shipments.
China’s rapid automation and its lack of concern for workers stand in stark contrast to countries where labor rights hold greater weight. Chinese workers lack their own platform for expression – there are no unions to speak for them, nor courts or social organizations to uphold justice on their behalf. They cannot muster the same resistance to factory automation as their counterparts in Western nations.
While some rejoice, many grieve
China’s manufacturing upgrade greatly benefits the CCP’s rule. This is because those in power can partially reduce the scope of non-human labor in China’s production processes to circumvent criticism. With automation and unmanned operations in place, conflicts between authorities or entrepreneurs and the working class diminish. Robots operate for employers around the clock without complaint. Moreover, automated factories have become so-called “dark factories,” largely reducing the electricity costs associated with lighting.
Unlike previous waves of openness in 1980s and 1990s, today’s manufacturing automation and unmanned operations are being advanced under the banner of state-owned enterprises. Recently, the State-owned Assets Supervision and Administration Commission (SASAC) launched a special fund in Beijing, established and managed by China Reform Holdings, to support strategic emerging industries within central SOEs. This exemplifies the principle of state-owned enterprises gaining a competitive advantage.
Read more by Chinese affairs expert Dr. Junhua Zhang
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This trend inevitably commands the attention of China’s competitors abroad, especially in locations where automotive manufacturing is the core of the economy. Gretchen Whitmer, governor of the U.S. state Michigan, the historical heartland of American car making, stated in late September that China’s industrial subsidies enable its companies to achieve price competitiveness that has had a “devastating impact on European industries. We cannot allow this to happen in the United States.”
The automation of China’s manufacturing sector aligns perfectly with Beijing’s goal of maintaining its position as the world’s largest supplier.
China’s manufacturing upgrade, however, goes beyond mere technological competition; it represents a contest between two distinct economic systems and political governance models.
The automation of China’s manufacturing sector aligns perfectly with Beijing’s goal of maintaining its position as the world’s largest supplier. Rapidly expanding automation and unmanned production will significantly reduce manufacturing costs. As long as external markets maintain their essential demand – or as long as recipient countries remain indifferent to China’s dumping practices – Chinese exports stand to see substantial growth over the next 5 to 10 years.
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