How China’s AI-powered robots could reshape the global order

share_windows This article appeared in The Diplomat on March 13 2026. 

When Chinese humanoid robots flipped, sparred, and performed martial arts alongside human performers – including children – on national television during the Spring Festival Gala, it was easy to dismiss the “dancing robots” as mere theater. Days later, German Chancellor Friedrich Merz’s visit to Hangzhou-based Unitree Robotics reinforced a far more consequential interpretation: this was not a viral stunt, but an industrial signal. China is trying to shift the global AI race from model performance in the cloud to “embodied intelligence” in the physical economy.

The global AI debate still tilts heavily toward “AI in the cloud”: frontier models, compute concentration, software platforms, and winner-take-most dynamics. The United States holds structural advantages in this layer – deep capital markets, hyperscalers, and the gravitational pull of top research labs. But China’s strategic emphasis is increasingly moving toward “AI in steel”: AI systems embedded in machines that sense, move, and adapt in the real world.

Just as China’s early electric vehicles were underestimated until scale, supply chains, and iteration ecosystems reshaped global competition, embodied intelligence and humanoid robotics is emerging as the next arena in which AI-driven great-power competition will be decided. And China is industrializing these technologies at speed and scale.

China’s Playbook In China, the “AI in steel” strategy frames embodied intelligence and robotics as a general-purpose capability. Humanoids are not primarily luxury gadgets; they represent a strategic bet on labor augmentation and operational resilience in settings where labor is scarce, tasks are repetitive or dangerous, and large-scale deployment generates the data needed to improve the next generation.

As Premier Li Qiang underscored in the Government Work Report delivered at the opening of the 2026 Two Sessions, embodied intelligence – alongside quantum technology, brain-computer interfaces, and 6G – is now positioned among China’s priority future industries. Notably, this is the first time embodied intelligence has appeared as a distinct category in such a high-level policy document, marking its elevation from niche technology to strategic industrial priority. More importantly, embodied intelligence and robotics are being folded into a longer-term blueprint for AI integration across manufacturing and strategic sectors under China’s 15th Five-Year Plan (2026–2030). 

Four features stand out.

First, China is building scenario data at scale. Embodied intelligence improves by doing: the more tasks robots perform in messy, real-world environments, the better the next model becomes. Chinese policy and local government programs have begun funding training and testing sites designed to generate scenario-specific data and accelerate deployment, as Reuters reported. This represents a critical difference from “cloud AI,” where training data is largely scraped, purchased, or simulated. 

Second, China is industrializing the component stack. The durable moats in humanoid robotics will lie in supply chains – and the manufacturing tooling that turns lab designs into scaled production capacity. China’s advantage is not mysterious: dense industrial clusters, deep supplier networks, and manufacturing scale that enable fast iteration and cost reduction. Spillovers from EV supply chains – motors, power electronics, precision manufacturing, and quality control – are already lowering the cost of building next-generation robots. 

Third, China is writing the rulebook. On March 3, Chinese authorities released the country’s first national standard system for humanoid robots and embodied intelligence, spanning foundational standards, computing, limbs and components, full-system integration, applications, safety and ethics. Standards do more than reassure consumers: they unify interfaces, testing, evaluation, and modularity across a fragmented industry, reducing coordination costs and accelerating diffusion. In a sector where safety, liability, and certification are central, standards become an industrial accelerator. 

Fourth, China is compressing learning curves through policy, funding, resources mobilization and closed iteration loops. The Gala performance did not prove humanoids are “ready for prime time.” It functioned as a high-visibility stress test and a national narrative signal. The industrial system then does the incremental, unglamorous work of making the next version cheaper, safer, and more reliable – turning a demonstration into a pipeline of continuous improvement. 

Why this matters for geoeconomic competition 

Unlike purely software-based artificial intelligence, embodied intelligence and physical robots possess actuation capabilities and physical agency. Deploying these technologies requires distinct regulations as well as safety and liability regimes. In a sense, when robots operate in the real world, safety requirements, certification pathways, and data rules should not be afterthoughts – they need to be market gatekeepers. Thus, the contest in this sector will increasingly be over who sets de facto norms for safety, interoperability, and industrial use cases. 

Many of these measures are subject to national-security screening. For this reason, the global embodied intelligence and robotics industry is drifting toward two competing blocs led by the United States and China, which has profound consequences for the rest of the world. This creates an uncomfortable tension with the West’s evolving economic-security toolkit. 

Greater scrutiny of sensitive technologies is defensible – particularly where dual-use risks, critical infrastructure exposure, or sensitive data are involved. But a broad-brush approach is, however, two-sided: security exposure is real, but so is scaling failure – a scenario in which the West builds excellent prototypes while China industrializes, standardizes, and captures market share. For AI and robotics firms, divergent standards and governance regimes can push them to dual-stack products – meaning designing systems to meet two separate regulatory frameworks – for different markets. 

Europe illustrates this squeeze. Germany remains an innovation heavyweight in robotics and automation, but the bottleneck is industrial scaling. This suggests that Europe could be stuck in what can be described as “pilot purgatory”: successful demonstrations that fail to translate into scaled, cost-competitive deployment. A report from South China Morning Post suggested that a leaked draft of the EU’s Industrial Accelerator Act would add biotechnology and robotics, along with AI, chips, and quantum technologies, to the list of “made in Europe” strategic sectors aimed at countering China.

To be clear, China’s push on humanoid robotics is not without constraints. While Chinese firms have made rapid inroads in precision components – for example, domestic producers like Green Harmonic are now supplying harmonic reducers at 30-50 percent lower cost than Japanese incumbents and capturing over 30 percent of the domestic market – the tighter bottlenecks lie upstream. China remains heavily reliant on Japanese and European machine tools to manufacture those components at the required precision, and its dependency on Nvidia’s physical AI stack and foreign cloud infrastructure for robotics software and simulation remains substantial. 

What this means for the global order 

Embodied intelligence sits at the intersection of productivity, supply chains, and security. That gives it strategic weight beyond the technology sector. As these systems diffuse, they will shape not only competitiveness but also the rules, dependencies, and bargaining power that underpin the global order.

Humanoid robots will not replace entire workforces overnight, but they can relieve bottlenecks in aging societies and labor-constrained industries: inspection, maintenance, materials handling, basic assembly, last-mile logistics, and hazardous operations. China’s comparative advantage in low-cost manufacturing and scenario-rich deployment positions it to export affordable automation to developing economies. Chinese robots are already gaining ground in Southeast Asian manufacturing, for instance.

This widens access to productivity-enhancing technology, but it also extends China-centered technical ecosystems and standards into new markets – an underappreciated dimension of geoeconomic competition. This will grant China further first-mover advantages: its ecosystem will industrialize faster, capture learning-by-doing gains, and increasingly shape global expectations for price-performance, interfaces, and deployment workflows. 

Even so, international standards bodies are still actively shaping the field. ISO TC 299 is currently developing dedicated safety requirements for humanoid robots through multi-year working groups, and these processes create at least a baseline architecture for convergence. This means that a full Cold War-style bifurcation of robotics is not inevitable. Supply chains remain interdependent, and many firms will attempt to dual-stack products rather than choose a bloc, despite higher compliance costs.

Amid intensifying geopolitical rivalry between the United States and China, and within a technologically interdependent environment, risk-tiered engagement matters. The goal should be to protect high-risk nodes without unnecessarily forcing the world into two incompatible automation systems, while preserving minimum viable convergence on baseline safety, incident reporting, and low-risk industrial interoperability. 

In the next phase of AI-driven competition, the winners will not only build the best models. They will industrialize them. The “dancing robots” that appeared on TV during Lunar New Year were a sign that China is building an industrial machine for embodied intelligence – standards, components, scenarios and data, and learning curves – much as it did in electric vehicles.