China’s robot makers have mastered the moves. Now comes the race for brains

Beijing, November 2 - Chinese robot manufacturers have recently transitioned their focus from creating humanoid robots that can run, dance, and perform backflips to developing the artificial intelligence necessary for those machines to be useful in various job settings. This shift has sparked a surge in investment in embodied AI, an area of research that aims to enable robots to understand their environment, learn new tasks, and adapt without pre-programming for every situation.

In the first half of 2026, Chinese companies involved in embodied AI raised 93.5 billion yuan ($13 billion) through 322 deals, a fivefold increase from the previous year. According to Dermot McGrath, founder of Shanghai-based technology consultancy ZenGen Labs, the competitive market is driving hardware prices down, leaving room for companies to differentiate themselves through their software "brain."

The race for superior AI in robotics has become a critical battleground in the US-China tech rivalry, with Chinese manufacturers leveraging their manufacturing prowess and access to real-world data to challenge American competitors. Companies like Spirit AI, Generalist, and X Square are developing AI systems capable of teaching robots new skills through minimal demonstrations.

These systems show promise in scenarios such as teaching robots to handle objects or navigate complex environments after observing a single human demonstration. Established manufacturers in China, such as UBTech and Unitree, are also investing heavily in AI development, recognizing the potential of robots to revolutionize industries like factories and logistics.

However, Chinese robot firms face challenges, including a shortage of advanced Nvidia chips due to US export controls and regulatory pressures on valuation growth. Despite these obstacles, Chinese companies continue to push the boundaries of AI-powered robotics, demonstrating their potential to become formidable competitors in the global market.