China is installing more robots than any other nation, and that may affect every other nation.

Shipments jumped27 percent to about 90,000 units last year, a single-country record and almost a third of the global total,and will nearly double to160,000in 2019, the International Federation of Robotics estimates.

The blazing pace hasnt dented Chinese wages yet but it might influence the global economy, according to a reportthis week by Bloomberg Intelligence.

Automation may drive productivity gains and export competitiveness, but the rising use of robots also threatens to exacerbate domestic income inequality, undermining consumption. And that could spill out beyond the countrys borders, economists said.

By turbocharging supply and depressing demand, automation risks exacerbating Chinas reliance on export-driven growth threatening hopes for a more balanced domestic and global economy, BI economistsTom OrlikandFielding Chenwrote.

Pay gains are intact. Domestic manufacturingworkers with a high-school education sawwages rise 53 percentfrom 2010 to 2014, according to China Household Finance Survey data cited by BI.

Increasing use of robots should be bad news for medium-skilled workers, especially those in sectors where routine work means scope for automation, Orlikand Chen said.Yet wage growth in China remains rapid, and if anything medium-skilled workers conducting routine work are doing better than average.

Robots are at the core of the governments sweepingMade in China 2025plan to upgrade factories to be highly automated andtechnologically-advanced. Replacing assembly-line workerswill also help it to offset a shrinking working-age population.

And while China is catching up to global leaders like South Korea and Singapore, saturation is nowhere in sight and its density of robots is below the world average, according to the IFR.

China also is buying more and more of its own robots. Under Made in China 2025 anda five-year robot plan launched last year, Beijing plans to focus on automating key sectors like car manufacturing, electronics, appliances, logistics, and food.

Therobotrevolutionproposed byPresident Xi Jinpingin 2014will also raise fears of greater inequalityas the benefits of productivity gains are skewed toward the owners of capital, at the expense of workers, according to BI. Such an outcome would be bad news for household spending and might delay the shift toward a consumer-driven economy, Orlik and Chen said.

The government also wants to increase the share of Chinese-branded robots in the countrys $11 billion market to more than 50 percentof total sales volume by 2020 from 31 percent last year, and aims to produce 100,000 robots a year by 2020, compared with 33,000 in 2015.That means competition will intensify for foreign firms that supply 67 percentof Chinas robots, such as JapansFanuc Corp.and Yaskawa Electric Corp., according to BI.

The combination of a massive domestic market, policy-driven technology transfer from foreign to domestic firms and government funding often proves brutally effective.

See original here:

China's Robot Revolution May Affect the Global Economy - Bloomberg