Robots Are China’s New Worry

China is worried. The robots are coming, and they could threaten the country’s rise as a global power.

Manufacturing is one of China’s most important industries. As of 2014, industry (which includes manufacturing) contributed 42.6% to China’s GDP. And on the world stage, China accounts for almost 25% of global manufacturing. The reason for China’s dominance is cheap labor costs: As of 2009, compensation was less than $5 an hour. But things are changing.

First, wages in China are rising. From 2007-2012, manufacturing wages in the country increased by 18% each year. Second, robots are new competition. They have a one-time upfront cost, almost no downtime, more efficiency and, most importantly—no wages.

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