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China's Factory Base Moves From Cheap Labour to AI and Automation
China's manufacturing sector is shifting away from its reputation for cheap, mass-produced goods toward highly automated plants turning out electric vehicles, batteries and renewable energy equipment, with up to $12 trillion in investment projected through 2035.
In the 1990s and early 2000s, items stamped "Made in China" filled Western clothing rails with fast fashion, stocked households with inexpensive white goods and supplied a steady stream of cheap toys.
The assumption of that period was that Chinese wages would eventually rise, prompting the market to find cheaper places to produce and bringing the country's run as a manufacturing power to an end. That expectation still lingers, along with a perception that Chinese output is cheap and low quality.
China's factories today are described as a different proposition. They are high-tech and highly automated, producing complex goods such as electric vehicles, renewable energy systems and advanced batteries. The country also makes the machinery and technology that powers advanced manufacturing itself.
Morgan Stanley estimates that China could invest up to $12 trillion through 2035 in infrastructure, factory upgrades and new industrial capacity.
The transition from cheap labour to AI and automation is cast as the foundation of a next industrial era that would deepen China's global manufacturing position, one that market forces would find difficult to dislodge.