100,000 robots a year from Shanghai

Access Archive

Dear Access member,

We’ve got six things at the top for you today.

And, in case I have not banged on about this enough already, we are redesigning our website and would love to hear what you want and need. Please take this five-minute survey — we would really appreciate it. Today is the last day the survey will be open.

—Jeremy Goldkorn and team

1. 100,000 robots a year from Shanghai

ABB is a Swedish-Swiss Fortune 500 engineering company, the world’s largest manufacturer of electric grids, and a leading maker of automation equipment. If you’re not an engineer or an investor, you may never have heard of it, but keep an eye out for its distinctive, minimalist logo and you’ll start seeing it everywhere, from apartment switch boxes to billboards to nuclear power stations.

(My first job in China was teaching English to engineers at an ABB factory on the outskirts of Beijing, which is how I first got to know the Zurich-based company. It had around 20 joint-venture factories in China in 1995.)

ABB has announced plans to build a $150 million, 75,000-square-foot robot factory in Shanghai, which will open in 2020 and produce robots for China as well as for export elsewhere in Asia, according to Reuters (and ABB’s press release).

  • ABB is already China’s largest industrial robot maker, and China is ABB’s second-largest robot market after the U.S.

  • As China ages and labor costs rise, companies — with government encouragement — are investing in automation. “In 2017, one of every three robots sold in the world went to China, which purchased nearly 138,000 units,” according to ABB stats cited by Reuters.

  • 100,000 robots a year will come off the Shanghai production line, or one quarter of ABB’s global demand last year, according to Bloomberg (porous paywall). The Shanghai plant will include an artificial intelligence research lab and become “the company’s single largest robotics facility around the world, producing the full range of ABB’s products from small payload robots to large ones that can lift an entire car.”

  • Kukua, the German robotics firm acquired by China’s Midea in 2016, is also expanding in China, says Reuters, “including by building a robot park in Shunde near Hong Kong.”

About robots in China

In a five-year plan announced in 2016, the government said it aims to increase its annual production of industrial robots in China to 100,000 by 2020, so the ABB plant alone would meet the target if production begins according to plans.

  • The output growth of industrial robots outperformed all other categories such as motor vehicles and mobile phones in 2016, according to official Chinese statistics, reaching a production volume of more than 72,000 units, an increase of 30.4 percent from 2015.

  • In 2016, China installed 90,000 new robots, or one-third of the world’s total, and by 2017 had around 800 robotics companies, according to Bloomberg. Robot Report, an industry news website, has a lower figure for the number of companies — 500 by 2017, up from 194 in 2015.

  • U.S. Secretary of Commerce Wilbur Ross “attacked China’s fast-growing robotics industry, warning that big subsidies risk compounding the overcapacity caused by Chinese state support for traditional industries such as steel,” reported the Financial Times (porous paywall) in September 2017.

  • Made in China 2025, the government plan to leapfrog China up the technology value chain that is frightening American lawmakers right now, targets robotics as one of 10 industries where the government wants domestic components and materials to comprise 70 percent by 2025.

  • See also: China underwater robot sets depth record on the Shanghai Daily today.

2. State media smiles at Japan

After Japanese prime minister Shinzo Abe’s successful visit to Beijing last week, Chinese state media has been mostly smiles in Tokyo’s direction:

The top story on most central state media organs is a version of this: Xi urges breaking new ground in workers’ movement, trade unions’ work.

3. Cornell ends partnership with Renmin University

Inside Higher Ed reports:

Cornell University has suspended a partnership with a Chinese university because of academic freedom concerns.

Eli Friedman, director of international programs for Cornell’s School of Industrial and Labor Relations, said that the ILR School had suspended two exchange programs because of concerns that its Chinese partner institution, Renmin University of China, had punished, surveilled or suppressed students who supported workers’ rights in a labor conflict that erupted this past summer involving workers trying to unionize at Jasic Technology in Shenzhen — or who have otherwise been supportive of workers’ rights. Students who traveled to Shenzhen to support the workers have reported facing pressures from their various universities.

Further reporting:

—Jeremy Goldkorn

4. The public shaming of Han Han and other stories from the Chinese internet

It’s been a busy weekend on the Chinese internet. These are are some of the stories that are captivating Chinese eyeballs right now:

  • In the latest Chinese Corner, our weekly review of Chinese online non-fiction, we look at a TV show that set out to shame (then) bad-boy novelist Han Han for dropping out of high school, suspicions about government promotion of traditional ethnic minority medicines, and efforts to improve Sino-Japanese relations in 1984. Please click through to SupChina to read.   

  • An unpleasant piece of news on the Chinese internet over the weekend:  The Nanchang railway police in Jiangxi Province have launched a hunt for a man who was captured in a viral video molesting an underage girl who appears to be his own daughter on a high-speed train on October 27. Click here for the story.

  • Two Japanese artists found that a Chinese company has been raking in the cash organizing a touring exhibition of their “works.” Except every single piece on display is a fake. Click here for the story.

—Jiayun Feng

5. Did I greatly exaggerate the death of Peking University?

Access members have complained to me that the subject line of Friday’s newsletter — The death of Peking University — was an overreaction to the appointment of the new Party secretary, who happens to have a history in the Ministry of State Security (MSS).

Sometimes it’s hard to keep a balance between enticing the reader to open the email and not sensationalizing the subject matter. I think I failed to keep the balance with that subject line.

But I stand by everything in the text of the email. Before I wrote it, I looked up every single Party secretary of Beijing’s famous university since 1949 (see the list in Chinese): I cannot find a single one with a background in the MSS — this is a new, and troubling development.

—Jeremy Goldkorn

6. Trade war, day 116: More companies prepare to shift supply chains

The American Chamber of Commerce in South China surveyed a broad sample of 219 companies from September 21 to October 10 about the impact of the trade war on their bottom lines. The resulting report is titled, Special Report on the Impact of U.S. and Chinese Tariffs. A press release accompanying the report can be found at PR Newswire.

Southern China, of course, is where the export manufacturing capacity of China is concentrated, and the majority of companies surveyed of all ownerships — American, Chinese, European, and others — reported an impact on their profits from tariffs. A few highlights of the report, per Reuters:

  • “Sixty-four percent of the companies said they were considering relocating production lines to outside of China, but only 1 percent said they had any plans to establish manufacturing bases in North America.” Southeast Asia is the primary prospective “winner” of the supply chain shift. (This is also what Bloomberg found last week when it listened in to multinational companies’ earnings calls.)

  • “Around 85 percent of U.S. companies said they have suffered from the combined tariffs, compared with around 70 percent of their Chinese counterparts.”

  • “Nearly half the companies surveyed also said there had been an increase in non-tariff barriers” — a.k.a. qualitative measures.

Trade tensions weighed on stock markets today. CNBC reports:

“The Dow Jones Industrial Average traded 550 points lower, erasing a 352-point gain, as Boeing dropped 8.4 percent. The 30-stock index also dipped into correction territory, down 10 percent from a record high reached earlier this month.”

Meanwhile, former U.S. Treasury official Brad Setser writes on Twitter that the trade war’s effect on American manufacturers based in the U.S. is nearly negligible — at least so far. It is “pretty clear that stimulus and a strong dollar has had a bigger effect” than tariffs, Setser writes. “Need to see q4, perhaps q1 [of 2019] to have a clear idea” of the total impact of tariffs, he adds.

Another interesting development in the politics of the trade war: Peking University economist Zhang Weiying has attracted attention by claiming that the current trade tensions are largely a result of China boasting too loudly about its “China model.” The SCMP reports:

  • Though Zhang is in a minority of liberal economists in China, his remarks from an October 14 lecture are notable for their rarity in public discourse. An “edited version of his speech was published on the university’s website” last week, though it is now censored.

  • “In the eyes of Westerners, the so-called ‘China model’ is equal to ‘state capitalism’, which is incompatible with fair trade and world peace, and therefore must be contained,” Zhang said.

  • “Blindly emphasising the ‘China model’ would lead us onto a path of strengthening state-owned enterprises, expansion of state power and overly relying on industrial policy, which would lead to a reversal of reform progress, wasting previous reform efforts, and the eventual stagnation of economic growth,” he added.

  • Zhang’s line of thought is shared by Sheng Hong, the executive director of the under-siege Unirule Institute, writes Andrew Batson.

Other stories related to U.S.-China relations and the trade war:


Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@supchina.com.

—Jeremy Goldkorn, Editor-in-Chief





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