China subsidies spur humanoid robot push, while Evergrande is liquidated
China is heavily subsidizing its humanoid robot sector, with government-owned training centers buying robots and feeding data back to manufacturers. Separately, a court accepted a bankruptcy petition to liquidate Evergrande after years of distress.
Key Takeaways: Chinese state subsidies driving the humanoid robot sector are likely to prompt protectionist steps in the West The coordinated liquidation of Evergrande and sentencing of its founder reflect Beijing’s priority of maintaining social stability image credit: Bamboo Works We’re currently witnessing two very different, yet equally telling, chapters of China’s state-managed economy playing out simultaneously.
On one hand, Beijing is heavily subsidizing a futuristic humanoid robot industry, utilizing a familiar playbook that has previously upended global markets.
On the other, the government is finally closing the book on fallen real estate titan Evergrande (3333.HK), liquidating it after years of careful, behind-the-scenes management.
These two developments perfectly illustrate how the Chinese government pulls the levers of its economy to manufacture technological dominance while engineering social stability.
A recent eye-opening report from the Financial Times revealed exactly who is buying up many of the dancing and leaping humanoid robots suddenly coming out of China.
Unsurprisingly, it turns out the answer is the government.
A sizable portion of these companies’ revenues comes from government-owned training centers.
These centers buy the robots, generate vast amounts of operational data using them, and send that data back to the manufacturers to rapidly improve their performance.
In one case, a company called Leju received 45% of the revenue for its flagship humanoid model last year directly from these government centers.
In China’s humanoid robot industry, this kind of comprehensive state support undeniably works.
Chinese companies receive substantial subsidies at the central, provincial, and local government levels.
Throwing such substantial amounts of money directly and indirectly at these efforts helps to build a highly efficient supply chain and ecosystem.
Inevitably, some companies thrive in this environment and decide to conquer the world, armed with highly competitive prices.
But this common refrain isn’t going to make robot makers outside of China very happy.
We’ve seen this exact Chinese playbook unfold in the solar and EV industries.
Western governments repeatedly complain about unfair state support, even if it isn’t always the most efficient use of capital.
In response to this new wave of robots, we expect to see inevitable pushback.
Governments in the U.S., Europe, and Japan will likely take belated measures to protect their domestic manufacturers, such as Tesla (NASDAQ: TSLA ) with its Optimus humanoid, from total obliteration.
Despite the glitzy videos of kung fu robots and machines breaking human running records, the reality is less glamorous.
Away from the hype, these robots may still be very prone to making mistakes.
There’s not a whole lot of use for a kung fu robot in daily life.
We believe the industry will split into two paths: industrial and personal use.
On the industrial side, there are plenty of applications that can tolerate occasional, or even multiple, failures because the risk of harming humans is incredibly low.
However, on the personal usage front, we’re far from mass adoption.
All it will take is one spectacular incident — we wouldn’t call it an accident, but an incident — where a robot beats up an elderly person in a hospital bed, for the industry to face massive trouble.
We shouldn’t forget how the Segway at the turn of the century was supposed to revolutionize the world.
Similarly, the low-altitude economy of flying machines lost its momentum the moment a small plane crashed into a building in Beijing.
Visionaries will always promise that technology will make life entirely peachy, but the safeguards simply aren’t there yet for mass adoption.
A carefully orchestrated end for a real estate giant Moving from the industries of tomorrow to the problems of yesterday, we’re also watching the final act of a long-running saga in China’s suffering property sector.
In late August, Chinese courts suddenly found Hui Ka Yan, the founder of Evergrande, guilty of massive fraud and financial mismanagement, sentencing him to life in prison.
Almost immediately after, a Chinese court accepted a bankruptcy petition to liquidate Evergrande — a move the company’s creditors have been requesting forever.
Many are speculating that the close timing of these two events isn’t a coincidence.
With things like this in China, there’s always an element of surprise because the system is so opaque that nobody truly knows what’s going on behind the scenes.
But in reality, everyone should have expected Hui to end up in serious trouble eventually.
Evergrande defaulted back in 2021 after years of growing skepticism in Western financial markets regarding the health of its finances.
The real estate sector’s troubles actually began before Covid, when the central government tightened borrowing rules to rein in companies that were building endlessly with cheap money in a market where everyone believed prices would always rise.