Despite negative fixed-asset investment trends and weak purchasing manager index (PMI) readings, certain segments of Chinese industrials continue to see robust growth. High-tech manufacturing output has been expanding at roughly 10%, compared with about 6% growth in overall industrial production. This strength is being driven by sustained double-digit capital expenditure in areas such as lithium batteries, printed circuit boards, and consumer electronics.
Core Growth Areas in China Industrials
Growth across China’s industrial sector is increasingly concentrated rather than broad-based. While headline indicators remain weak, multiple pockets of demand are expanding simultaneously, supported by industrial upgrading, electrification, and infrastructure investment. The following sections highlight the key areas where activity and capital expenditure are accelerating, spanning automation, emerging robotics, power and energy infrastructure, transportation, and selected commodity-linked segments.
Automation
Monthly order growth for four major Chinese automation players accelerated toward year-end, reaching roughly 20% to 30% across all four.
Demand is being driven by batteries, 3C electronics, and semiconductors, as well as more traditional end-markets such as plastic injection molding equipment, excavators, and heavy-duty trucks. Much of this activity reflects replacement demand.
This rebound also aligns with a broader pickup in global automation spending. While the global recovery remains narrow—largely concentrated in semiconductors and data centers—it is nevertheless occurring in parallel across regions.
Humanoid Robotics: Taking Shape
I view many Chinese humanoid robot developers as born leaders in a new industry. China has rapidly advancing AI capabilities to develop the “brain” of humanoid robots, and it already possesses the manufacturing scale and infrastructure to industrialize production. Taken together, I believe this gives China a credible path to leadership—or at least co-leadership—in the humanoid robotics market.
An estimated 15,000 to 20,000 humanoid units were shipped last year.[1] We expect shipments to rise to roughly 50,000 units in 2026, 100,000 in 2027, and just over 1 million by 2030.[2] At an average price of approximately $44,000 per unit, this implies a market of roughly $50 billion.[3]
For context, that is roughly comparable to the annual revenue base of Nike, which reported approximately $46 billion in sales in 2025.[4]
Heavy-Duty Trucks and Engines
Another area of strength is heavy-duty trucks, where sales in China have begun to recover. Replacement subsidies are supporting demand, while the shift from diesel to liquefied natural gas (LNG) engines and rising orders for large engine-powered generator sets used in data centers are providing additional tailwinds. Performance across leading domestic manufacturers has been strong, with improving competitiveness on a global basis and increasing pressure on established international incumbents in the data center genset market.
Lithium Batteries and Energy Storage
Lithium batteries are another key growth engine. Total battery demand exceeded expectations in 2025, rising roughly 50%, and is forecast to grow an additional 35% or so in 2026.
The primary driver has been energy storage systems (ESS), with shipments up more than 100% last year. Growth in renewables, AI data centers, and grid-scale storage continues to accelerate demand. Importantly, there is a lag between battery shipments and installations, meaning last year’s shipment strength is now feeding into current-year deployment.
China is expected to account for more than half of global utility-scale ESS installations, creating strong downstream demand for power grid equipment. As a result, leading domestic manufacturers are experiencing significant momentum.
EVs, ADAS, and Mobility
In electric vehicles, we expect China’s overall passenger vehicle market to be broadly flat this year. We expect EV volumes to grow 5% to 10%, offset by a 5% to 10% decline in internal combustion engine vehicles. Within EVs, we believe there are still clear pockets of growth.
Advanced driver assistance system (ADAS) penetration is expected to roughly double, which could benefit lidar and sensor suppliers. Robotaxi adoption continues to rise, and exports remain a key source of upside.
Commodities and Resource Nationalism
Lastly, Chinese commodities are seeing a renewed focus driven by resource nationalism and the rising strategic importance of critical minerals. China is the world’s largest consumer of most major commodities, but it is also a significant producer—ranking first globally in aluminum and cobalt, with substantial production in lithium, gold, and copper as well.
Capturing Growth in China’s Advanced Manufacturing
When thinking about how to capture growth in China’s advanced manufacturing, we see two distinct types of potential winners.
Potential Winner Type One: Share Gainers Closing Technology Gaps
The first group consists of share gainers that are closing technology gaps with global leaders. A notable example is servo motors, which are precision motors used to control position, speed, and torque with high accuracy. Here, domestic players have increased market share significantly over the past five years, largely at the expense of foreign competitors.
There are battlegrounds where international incumbents dominate.
Still, there are battlegrounds where international incumbents dominate. Large programmable logic controllers (PLCs, which are rugged industrial computers used to automate machinery and industrial processes) are one example. These systems are used in critical applications such as refineries, where tolerance for failure is effectively zero. Global players still lead, with Siemens at about 50% market share in China. However, domestic companies are now pushing aggressively into PLCs as national champions and are beginning to gain traction. Given the size of this market, meaningful share gains could be transformative for the broader automation sector.
Potential Winner Type Two: Leaders in New Industries
The second group of potential winners consists of leaders in entirely new industries. One example is a company specializing in the AI “brain” of robotics, commanding a leading global market share that exceeds that of its next several competitors combined. Rather than manufacturing robots itself, this company focuses on 3D vision systems and dexterous end effectors that can be integrated with standard six-axis robots. These capabilities enable machines to perform complex tasks such as adaptive grasping and object manipulation, with broad implications for applications such as bin picking, depalletizing, and industrial automation more generally.
Investment Implications Case Study: Humanoid Robots
While humanoid robotics represents one of the most compelling new growth frontiers within China’s advanced manufacturing ecosystem, it also stands out as an area where the investment implications differ meaningfully from the underlying growth narrative. Rapid technological progress, shifting competitive dynamics, and wide dispersion in valuations make it difficult to identify long-term OEM winners with confidence at this stage. As a result, we separate humanoid robotics here to focus explicitly on how to invest in the theme—rather than simply on why the industry is growing. Let’s look, then, at some of the investment implications.
There are three main models in the humanoid space: original equipment manufacturers (OEMs), parts suppliers, and integrators.
OEMs
OEMs in China include humanoid developers such as AgiBot, Unitree, and Engine AI. In the United States, it’s Tesla, Figure AI, Agility, and more recently Boston Dynamics.
Most emerging markets robotics companies that are already shipping humanoid products—such as Unitree—are valued in the $5 billion to $10 billion range. By contrast, Figure AI, which I would rank as a clear second-tier leader, recently raised a series C at a roughly $40 billion valuation. Optimus, Tesla’s humanoid robot, is valued by Morgan Stanley at approximately $200 billion, which effectively represents the current base case for a category leader.
The reason this matters is that much like the early days of EVs, it remains highly uncertain which OEMs will ultimately emerge as winners. The landscape is evolving rapidly, and leadership can shift quickly.
I believe the more attractive opportunity is the supplier ecosystem rather than in individual humanoid OEMs.
This is demonstrated by the recent resurgence of Boston Dynamics, which has moved to the front of the pack in a short period of time.
Until recently, the company was widely dismissed. It was the only major humanoid OEM still relying on hydraulic actuation rather than electric systems. Boston Dynamics’ humanoid also lacked functional hands, relying instead on simple end stubs, which limited its perceived commercial viability. At the same time, the company’s robots were priced at about $500,000 to $600,000, versus $30,000 for Chinese peers and $50,000 for U.S. peers.
But Boston Dynamics’ perception changed at the Consumer Electronics Show (CES) when the company won the Best Humanoid award. Since then, Hyundai Motor Company, which owns a 27% stake in Boston Dynamics, has seen its share price rise roughly 78% year-to-date. With Hyundai’s market capitalization now near $74 billion, the implied valuation of Boston Dynamics is roughly $116 billion—primarily driven by investor excitement around its stake in the company. This is well above the roughly $40 billion valuation most analysts had previously assigned.
Given this uncertainty, I believe the more attractive opportunity at this stage is likely to be the supplier ecosystem rather than in individual humanoid OEMs.
Parts Suppliers
The second business model is parts suppliers—companies that manufacture critical components used in humanoid robots. One firm in this category, for example, has sum-of-the-parts exposure including precision ball screws and roller screws—key components used in joints and actuators.
Another notable player is differentiated by its exposure to precision roller screws—among the highest-value components in humanoid robots. Beyond robotics, its core hydraulics and pump business is benefiting from a replacement cycle in China and accelerating exports. Although margins are strong and valuation appears elevated on the surface, its market position and growth profile help support a more favorable growth-adjusted view.
System Integrators
The third business model is system integrators. They may manufacture certain components in-house while sourcing others. These components are then integrated into full actuators and sold to OEMs, including Optimus.
A leading domestic player in automation and robotics stands out for its vertically integrated model, manufacturing many components in-house and positioning itself as a credible long-term winner in the space. While its core automation business commands a premium valuation, the market appears to assign limited value to its emerging exposure to humanoid robotics, reflecting the early-stage nature of that opportunity and the absence of clear OEM alignment.
Another notable company offers exposure to both humanoid robotics and AI-related data center infrastructure, but current expectations embedded in the valuation appear aggressive. Achieving these assumptions would require rapid scaling of humanoid production that may not align with current industry timelines, while its legacy businesses—such as EV components and air conditioning—are showing signs of moderation.
Where else do we see growth in China? In parts one and two of this series, Vivian Lin Thurston and Andrey Glukhov discussed China’s AI boom and China’s next phase in healthcare innovation.
Pierre Horvilleur is a research analyst on William Blair's global equity team.
China Growth Series
Part 1 | China’s AI Boom: From Compute Constraints to Commercial Momentum
Part 2 | China’s Next Phase in Healthcare Innovation
Part 3 | China Industrials: Growth Beneath Weak Headlines
[1] Source: Goldman Sachs 2026 reports. [2] Source: Goldman Sachs and industry/Tesla-aligned projections. [3] Source: IDTechEx and William Blair estimates. [4] Source: Company reports.
