In a bold new report, investment bank Morgan Stanley asserts that China is strategically positioning itself as the leader in the race to develop advanced humanoid robots. 
As major technology figures like NVIDIA CEO Jensen Huang and Tesla’s Elon Musk continue to champion humanoids, Morgan Stanley shares a series of key insights explaining why China may be ahead of the US in this technological race.
The report emphasizes China’s dominance in the rare-earth metals market, which are vital for manufacturing electronics and robots. According to Morgan Stanley, China controls 65% of global rare earth mining and a staggering 85% of the refining market. This gives the country significant leverage, which was evident during trade negotiations with the US under President Trump. The bank argues that China’s ability to influence the output of the Western manufacturing complex through its rare earth monopoly could give it a crucial edge in robot production.
Additionally, Morgan Stanley points to China’s rapid advancements in manufacturing technologies. The country has benefited from a combination of technology transfer from Western firms and its own indigenous innovations. In particular, the bank highlights the role of ‘Creative Destruction’-a competitive internal environment where innovation often leads to the displacement of existing players. This competition is driving the pace of AI and robotics development in China, with every province and city investing in these technologies.
China’s commitment to integrating advanced technologies into the People’s Liberation Army (PLA) and addressing its demographic challenges through robotics is also fueling growth in the sector. The country has been proactive in fostering public interest in robots, organizing events such as marathons, boxing competitions, and dance performances to engage the population.
One of the most significant areas where China surpasses the US is vocational education. The report notes that China had 5 million students enrolled in over 11,000 vocational schools in 2023, while the US had only around 923,000 students in similar institutions. This focus on vocational training is preparing a skilled workforce that is vital for the development and manufacturing of robots.
Further supporting China’s robotic ambitions are government subsidies, aggressive infrastructure investments, and long-term strategic planning. The Chinese government offers substantial R&D tax incentives, enabling companies to deduct up to 200% of qualified R&D expenses, and has committed to developing world-class manufacturing infrastructure. The final factor in China’s favor is its approach to long-term planning, which the report likens to the ancient Chinese strategy game Go. Morgan Stanley suggests that China’s strategy is one of patience and gradual maneuvering, contrasting with the more short-term, results-oriented approach often seen in the US.