In a spectacular showcase of technological prowess, more than a dozen humanoid robots twirled red handkerchiefs and danced in perfect harmony to traditional Chinese folk music during China’s annual Lunar New Year gala. With over a billion viewers watching, this performance was more than just entertainment—it was a bold statement about China’s growing ambitions in the world of humanoid robotics.

Over the past few months, viral videos of Chinese humanoid robots executing acrobatics, including backflips and roundhouse kicks, have taken the internet by storm. These feats are being heavily promoted by state media as a sign of China’s next big economic breakthrough.

Although humanoid robots are still in the early stages of mass production, the competition in this sector is intensifying—especially with Tesla and its Optimus robot in the mix. Elon Musk has repeatedly emphasized that the market for humanoid robots could surpass $10 trillion in value, making them a transformative force in both industry and everyday life.

But while Musk has grand visions, China is rapidly catching up. Backed by aggressive government funding, the world’s most advanced supply chains, and a rapidly evolving AI ecosystem, Chinese firms are positioning themselves as formidable contenders in the race to dominate this lucrative industry.

The Global Surge in Humanoid Robotics Investment

Across the tech world, giants like Microsoft, Nvidia, and Amazon founder Jeff Bezos have all placed major bets on American humanoid robotics startup Figure AI. Meanwhile, Meta is also planning significant investments in humanoid robots, according to Bloomberg.

Elon Musk first introduced Tesla Optimus in 2021, showcasing a prototype in 2022. Since then, Musk has doubled down on its potential, recently predicting that humanoid robots could eventually outnumber Tesla’s electric vehicles in production.

The financial world is taking notice. In a 2023 Goldman Sachs report, analysts projected that the global humanoid robot market would reach $38 billion by 2035. In just five years, they estimate that 250,000 humanoid robots—primarily for industrial use—will be shipped. Within a decade, that number is expected to soar to one million units per year for consumer use.

China, eager to replicate its electric vehicle (EV) success, has set its sights on leading this next wave of innovation.

China’s Strategic Push for Robotics Dominance

The Chinese government has publicly declared humanoid robotics a “new frontier in technological competition”, outlining a 2025 goal for mass production and self-sufficiency in key components.

Despite entering the humanoid race later than Tesla, Boston Dynamics, and Figure AI, Chinese companies are making up for lost time by leveraging their vast manufacturing capabilities and cost-cutting expertise.

China already dominates industrial robotics, deploying more robots per year than the rest of the world combined since 2021, according to the International Federation of Robotics. While industrial robots are simpler than humanoids and mainly serve manufacturing functions, China’s expertise in robotics supply chains gives it a unique edge.

Government support has accelerated this progress. Since 2021, China’s local governments, including those in Beijing, Shanghai, and Shenzhen, have poured at least 73 billion yuan ($10 billion) into the development of humanoid robotics.

Last month, Chinese President Xi Jinping personally met with the nation’s top business leaders. Among them was Wang Xingxing, CEO of Unitree, the company behind the viral dancing robots—an unmistakable signal of Beijing’s commitment to this emerging industry.

Other major Chinese players include:

• UBTech (Shenzhen)
• Agibot (Backed by EV giant BYD)
• Robotera (Beijing)
• Fourier Intelligence (Shanghai)
• XPeng (EV maker also developing humanoids)

With such heavy backing, China is rapidly closing the gap with the United States in humanoid robotics innovation.

China’s Challenges: Core Technologies and U.S. Restrictions

Despite its rapid progress, China still lags behind the West in key technologies like:

• Advanced AI chips
• High-precision sensors
• Robot operating systems

A Morgan Stanley report last month revealed that 56% of the global humanoid robotics supply chain is already based in China. However, many Chinese companies still rely on foreign AI chips—primarily from Nvidia—to power their robots.

The United States, citing national security concerns, has imposed increasingly strict export controls on advanced AI chips, limiting China’s access to critical semiconductor technologies. In response, China has been aggressively investing in its own domestic chip supply, aiming for full self-sufficiency in artificial intelligence processing.

Additionally, European, American, and Japanese companies still dominate the production of:

• High-end sensors
• Precision motors
• Specialized screws for robotics motion control

To counteract this reliance, Chinese firms are actively working with Tesla’s supply chain. According to market research firm TrendForce, many Chinese suppliers have sent Tesla component samples for testing. These companies refine their designs based on Tesla’s feedback and then sell the improved versions domestically—creating a feedback loop that enhances China’s entire humanoid robotics industry.

China’s Biggest Advantage: Price Disruption

While China may still trail in some high-end technology, cost efficiency is where it excels.

Two Chinese companies have already released low-cost humanoid robots that dramatically undercut Tesla’s estimated price:

• Engine AI PM01: 88,000 yuan ($12,175)
• Unitree G1: 99,000 yuan ($13,697)

By contrast, Musk has stated that Tesla’s Optimus is expected to be priced between $20,000 and $30,000.

Chinese EV giants like BYD and XPeng, which have mastered the art of rapid scaling and cost reduction, are now leveraging their expertise to produce affordable humanoids. Given the similarities between humanoid robotics and electric vehicles—such as battery technology and advanced sensors—these companies are well-positioned to dominate the industry.

The Bigger Picture: China’s Shrinking Workforce and the Rise of Humanoids

China’s population has declined for three consecutive years, raising concerns about labor shortages. With fewer young workers entering the economy, humanoid robots could become an essential tool to fill employment gaps in manufacturing, caregiving, and household services.

Experts believe that if China can scale humanoid production as successfully as it did with EVs, these robots could revolutionize the workforce and become as ubiquitous as smartphones.

Brady Helwig, an associate director at the Special Competitive Studies Project, notes that humanoid robots could be the “wild card” that helps China offset its demographic crisis.

“If China can mass-produce humanoid robots and integrate them widely into the economy, it could transform industries, reduce labor shortages, and create a new global market,” Helwig said.

The Future: Who Will Win the Humanoid Race?

While Elon Musk envisions a $10 trillion future for humanoid robots, China is moving aggressively to claim its share of that market. With its cost advantages, government backing, and relentless supply chain optimization, China could soon pose a serious challenge to Tesla and its Western counterparts.

The next five years will determine whether Musk’s vision of a humanoid-filled future will be dominated by American innovation or Chinese mass production.

Whoever wins the race, one thing is clear: humanoid robots are no longer science fiction—they’re on the verge of becoming an everyday reality.

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