China’s Aging Population Drives Robotics Industry Growth as Youth Dividend Declines
China is facing the challenge of an aging population and a dwindling youth dividend, leading the country to turn to robotics as a potential solution. With the population shrinking for the second consecutive year, China’s demographic landscape is rapidly changing.
In the past, China’s success relied on two crucial factors: institutional deregulation and the demographic dividends of a young and expanding population. However, these dividends are now evaporating at a rapid pace, signaling the need for alternative growth engines.
To combat the erosion of its demographic dividends, China has embraced automation and promoted the Made in China 2025 strategy. This has led to the widespread adoption of industrial robots in the manufacturing sector, subsequently replacing tedious and monotonous tasks previously performed by human workers.
China has witnessed substantial growth in its robotics industry, becoming the world’s largest market for industrial robots in 2013. Over the years, the nation has also emerged as one of the leading producers of industrial robots, with its output expanding at an average annual rate of 31% from 2016 to 2020.
The growth of robotics is not limited to the manufacturing sector alone. The penetration of commercial robots, such as robot vacuums and delivery bots, has been steadily increasing. This trend is likely to continue as China grapples with its aging population.
Recognizing the potential of robotics, the Chinese government has taken steps to foster the adoption of these technologies. Last year, the Ministry of Industry and Information Technology released a Robot Plus Application Action Plan in collaboration with other government agencies to support the integration of robotics across various sectors.
China possesses significant advantages in the robotics industry. Its renowned supply chain strengths enable manufacturers to produce high-quality products at a fraction of the cost compared to developed nations. Additionally, China benefits from an engineering dividend, where highly capable engineers are available at relatively lower costs.
Unlike other sectors facing restrictions on access to high-grade artificial intelligence (AI) chips, China’s robotics industry is less affected. The country has developed its own 28-nanometer technology, which is sufficient for most robotic applications and reduces its dependence on chip imports.
However, while China excels in hardware development, it lags behind in terms of software, particularly generative AI. This discrepancy is largely due to restrictions on chip imports. Nevertheless, physical AI agents like robots play a crucial role in achieving embodied AI, complementing the growth of large language models.
China’s shift toward robotics reflects its desire to transition from relying heavily on demographic dividends to embracing the potential of robotics. With an aging population, the use of robots in various sectors is likely to increase, offering a way to compensate for the decline in the youth dividend.
As China’s robotics industry continues to advance, the nation’s supply chain strengths and abundance of engineers provide a competitive edge. The growth of humanoid robotics, from prototype to mass-market product, is a testament to China’s potential in this field.
In conclusion, China’s aging population has spurred the growth of its robotics industry. The country’s focus on automation and the adoption of industrial robots in manufacturing, as well as the development of commercial robots, highlight its commitment to finding alternative solutions amidst the decline of its demographic dividends. While challenges remain in the software aspect of AI, China’s position in the robotics market is poised to strengthen in the coming years, driven by its supply chain capabilities and engineering talent.
