On February 16, of households tuned in to watch humanoid robots from four distinct Chinese firms dance, perform in a comedy sketch, do parkour, and put on at the Spring Festival Gala—China’s most-viewed television program. Throughout the nation, drone displays illuminated the night skies during Lunar New Year celebrations, with tens of thousands of drones synchronized by artificial intelligence.
The excitement around physical AI has crossed the Pacific. At this year’s flashy Consumer Electronics Show in Las Vegas, Chinese startups dominated the convention, showcasing AI-powered hardware ranging from smart home appliances and wearables to various types of robots.
While U.S. cutting-edge labs are in large language model rankings, China’s AI capabilities are manifesting in tangible ways—moving beyond screens and into our daily lives. We’ve experienced over a decade of what, in the of venture capitalist Marc Andreessen, is “software eating the world.” Now, metal and mathematics have merged, and hardware is taking over the world.
As AI integrates into our physical environment, we’re rapidly entering of embodied intelligence. Unlike previous years when China played catch-up in AI models, it’s now pulling ahead of the U.S. in physical AI.
China is fully committed to physical AI
Picture streets filled with robotaxis and delivery robots. Envision general-purpose humanoids becoming as ubiquitous as smartphones—handling household chores, caring for our parents, and taking on tasks humans don’t want to do. Imagine 24/7, fully automated “” factories producing more robots without human workers. And think of nations commanding drone swarms and robot dog packs that can make decisions and execute missions without human intervention.
We’re on the brink of this future—and much of it is currently driven by China. For a long time, scalability was a major bottleneck for robotics. Now, hardware costs have dropped by more than as China achieved manufacturing dominance in adjacent industries like , which have spurred innovations and economies of scale in robot-related components such as actuators, sensors, and batteries. Meanwhile, recent progress in (models that process multiple types of information—like visual and audio—simultaneously) is enhancing robots’ generalization capabilities for everyday tasks.
Today, China controls a large portion of the supply chain underpinning robotics. It leads the world in lidar sensors, holding an estimated of the global market. Suzhou-based Leaderdrive has quickly become one of the world’s biggest producers of, gears which are crucial to a wide range of robotics. Eyou Robot Technology recently the world’s first automated production line for humanoid robot joints in Shanghai. And Chinese companies like ESTUN and Inovance are emerging as dominant players in controllers, which essentially act as a robot’s brain.
Humanoid Robots
China’s ability to manufacture domestically at scale has driven down the cost of robots—including humanoid forms, which are extremely expensive to produce due to the sheer versatility and dexterity of human movement.
Last year, Chinese firms released several entry-level humanoids for home use to the mass market, including Noetix’s , a family companion and education robot priced as low as $1400.
While the technology for adaptive humanoid robots isn’t fully mature yet, whichever country deploys robots faster will collect more data, which in turn unlocks better future deployments. In 2025, China accounted for of global humanoid robot installations and of the world’s industrial robots. What’s more, cities across China such as , , and are opening training sites to acclimate robots to various settings (including environments mimicking a retail outlet, an elderly care facility, and a smart home) and harvest standardized data.
The excitement around still-nascent humanoids signals what’s to come for physical AI. Since the 1970s, companies have tried to build autonomous robots but were stuck pre-programming them for fixed tasks in controlled environments. After decades of attempts, however, the generative AI revolution now allows robots to perceive and sense the real world, generalize from limited training data to novel situations, and learn to operate in dynamic environments.
Over time, robots will be able to reason, adapt, and execute in real time without a constant cloud connection. Eventually, they’ll be able to work, build, manufacture, farm, and fight on without humans. Robots will form a labor force that never needs rest. They’ll automate entire supply chains and perform physical tasks humans can’t do. And China is currently winning the robotics revolution.
The Future of the AI Race
To be sure, there’s still reason to believe the U.S. can regain its lead in physical AI.
We would argue that China likely faces excessive competition and waste (in 2025, the country tallied humanoid robot startups). While China’s humanoid robots are glitzy, many can’t reliably perform skilled human tasks. Plus, there’s little consensus on when they’ll enter our daily lives. The world’s second-largest economy also remains dependent on foreign suppliers for certain high-end components like advanced servo motors. Meanwhile, the U.S. in advanced simulation platforms and has notable players like Tesla, Figure AI, and Physical Intelligence—companies that may still outpace Chinese competitors by focusing on software breakthroughs over sheer hardware volume.
Yet, China’s robotics strategy mirrors how it built its lead in the EV industry: early state support enabled a myriad of entrants, created more demand, boosted production volume, and cultivated manufacturing experience—resulting in intense competition and economies of scale that fostered globally competitive brands.
When it comes to physical AI, the U.S. has distinct advantages in software, foundational research, talent, and chips that will prove indispensable. But in the age of hardware eating the world, America also needs to learn from China’s approach. The U.S. should nurture the sector, rebuild its supply chain with allies producing critical components, support open-source models to accelerate robot development, possibly regain manufacturing expertise via reverse tech transfer and joint ventures with Chinese firms, and deploy American robots in sectors that act as a sandbox—starting with factory floors.
Chinese robots are coming, whether or not America builds its own.
