20 May 2015

The Emperor’s silicon army


The Chinese emperor Qin Shi Huang was much concerned with life after death. So concerned that by the time he died around 2,200 years ago he had created an 8,000 strong army of servants designed to do his bidding in the afterlife. The ‘terracotta army’ now familiar throughout the world was produced over several decades on a sophisticated ‘cellular’ production line which featured the use of lathes for grinding and polishing, the earliest recorded use of factory machinery. It is all strangely suggestive of the technological Chinese revolution that is taking place today in the laboratories and factories of the People’s Republic.

China’s modern day techno-warriors are machines – industrial robots which reproduce human activities on factory production lines, but which do those tasks faster, more accurately, and cheaper than humans. The machines may be made of the same stuff as the terracotta army (terracotta like most clays is made primarily of minerals based on aluminium and silicon, the two elements that are the essential building blocks of a programmable industrial robot) but the impact of this silicon army is going to be considerably greater than that of Emperor Qin’s immobile clay soldiers.

The received image of the Chinese economy is of a low-wage sweatshop where countless millions of blue-collar workers assemble gizmos for Western consumers. That picture is now seriously out of date. In the factories located in the super-city that is the Pearl River Delta, manufacturing is now just as likely to be undertaken by state-of-the art computer-controlled industrial machinery. Today China is on a high-speed journey into the age of machine intelligence.

In 2013 China became the world’s fastest-growing market for industrial robots, according to the International Federation of Robotics (IFR), an industry group for robot makers worldwide. In 2014 China bought more industrial robots than any other country – a quarter of the 225,000 robots that were sold last year. This year it will buy more. The shift from an agricultural economy to a capital-intensive machine economy is not unique to China, but it’s a shift that Western economies have had two centuries to accomplish. China is experiencing the change in little more than a generation.

The industrial robots that are changing China’s industrial economy forever are both sophisticated and simple. The machines built by leading manufacturers like ABB Robotics or Kuka of Germany are sophisticated in terms their advanced materials, their exquisitely-engineered gears and motors, and the capabilities of their computer control systems. But they are simple in concept: an industrial robot is no more than a machine capable of operating on a three-axis basis, usually a tool-bearing arm that is capable of being programmed and re-programmed. They lift, they drill, they polish, they weld, and often in circumstances that are unsuitable for humans. Robot makers work on the principle of the ‘Four Ds’ – work that is dangerous, or dirty, or delicate, or dull is the kind of work that robots are designed for, and that is where they are usually employed.

Today Japan is the country with more industrial robots than any other, followed by the US. But that won’t stay the case for long. By the end of this year China will have overtaken the US, and by 2017 China will have more robots installed and working than anywhere else (according to forecasts by the IFR). China won’t be anywhere near being the most heavily roboticized economy – that is something that is measured in ‘robot density’, the number of installed machines per 10,000 human workers, and Japan has by far the greatest robot density – but that only suggests the scale of what is to come in China.

And what, you may ask, about the workers? What will happen to the working class Chinese who will be displaced by this wave of automation of the world’s supposedly communist mega-economy? Chinese companies work on a back-of-the-envelope calculation that one industrial robot must do the work of three human workers for returns to justify investment.

The answer is nothing will happen, because those ‘displaced’ workers don’t actually exist. The biggest problem Chinese manufacturers face today is an acute labour shortage. Chinese manufacturing wages have been rising at 10% or more a year for the last decade – Chinese workers are now paid on average more than five times what their Vietnamese equivalents earn – but even so an ever-smaller fraction of the Chinese labour force is willing to spend 10 hours a day assembling mobile phones or Macbooks and sleeping in a company dormitory. According to the provincial authorities in the Pearl River Delta there is currently a shortage of almost a million factory workers, a gap which it is going to take an awful lot of robots to fill.

And a lot of robots is exactly what China’s high-tech manufacturers plan to buy. A million human jobs corresponds roughly to the work that will be done by all the robots that China will install over the next five years. For the time being the world’s ‘Big Four’ robot makers (that is ABB Robotics, Kuka of Germany, plus Yaskawa and Fanuc of Japan) will be happy to fill the Chinese robot gap with their costly, high-quality and very profitable products. But that too will change: China already has over 400 companies producing some kinds of robots, some of them direct competitors with the established Big Four makers who are already being forced to cut prices on some products. Although the IFR says that China’s own robotics companies still concentrate on low-cost, low-quality products aimed at manufacturers who serve the domestic market, everything about the history of Chinese manufacturing suggests they won’t stay at the bottom of the market for long. Chinese motorcycles, cars and construction machinery are already challenging the middle market, while Chinese computers are at the leading edge of the industry. The robots are next.

Today China is experiencing the latter phase of globalisation. A society that was chronically impoverished has undergone the transformation of industrialisation in accelerated and compressed form, with all the trauma that implies. The Chinese who have emerged from that history have very different hopes and expectations to those of a generation back – their dreams extend far beyond a life on the production line. They are leaving that to the machines.

What other effects this transformation may have on China, its people and its government are hard to predict. But these are deep, even revolutionary changes, and the effects may be revolutionary too.

Richard Walker is a journalist and communications advisor to financial companies.