Trump Tariffs, Chinese Dark Factories and Make in India
Bappa Sinha
THE Trump administration has launched an all-out trade war to isolate China and bring manufacturing, hollowed out through decades of outsourcing, and its associated jobs back to the US. While the Trump Tariffs and tantrums hog the headlines, China has quietly gone about implementing its long-term vision to transform its manufacturing sector and economy. Few narratives encapsulate global economic shifts like the story of China’s rapid automation revolution. Through harnessing investments in robotics, artificial intelligence (AI), and digital infrastructure, China is reengineering its manufacturing base – moving from traditional, labour-intensive processes to fully automated, high-tech “dark factories.” Meanwhile, India’s ambitions for self-reliance, exemplified by initiatives such as “Atmanirbhar Bharat” and “Make in India,” risk falling short unless they come out of their neoliberal trance and embrace a long-term commitment towards bolstering the development of self-reliance in science and technology.
For decades, China earned its place as the globe’s low-cost factory floor. However, over the past ten years, China has strategically pivoted towards high-precision manufacturing. Under the “Made in China 2025” roadmap, launched in 2015, the government earmarked ten advanced sectors – robotics and AI among them – for massive R&D funding and easy access to state-bank credit. By 2023 alone, over $1.4 billion flowed into domestic robotics research, while industrial lending surged to support facility upgrades and equipment purchases. As a result, China has become the world’s largest consumer of factory robots and now boasts a robot density of 392 per 10,000 workers – nearly three times the global average. Factories across China are automating at a breakneck pace, integrating artificial intelligence (AI), robotics, and advanced sensors to improve quality and lower manufacturing costs. This allows Chinese factories to maintain competitive export prices, even in the face of tariffs from the US, the European Union, and developing countries. A shrinking working-age population and more young people pursuing higher education instead of factory jobs have made automation not just a competitive edge but a demographic necessity.
China has built over 30,000 basic-level smart factories as part of a nationwide push to accelerate industrial digitalisation and intelligent upgrading. The initiative has also seen the creation of 1,200 advanced-level and 230 excellence-level smart factories. This achievement highlights the significant progress that has been made in reshaping the country's manufacturing landscape.
The "Industrial Internet" forms the digital backbone of this transformation, connecting industrial systems with advanced computing and data analytics to enable smart factories and optimise production. Building on this, the "5G + Industrial Internet" initiative aims to integrate 5G technology into large-scale manufacturing, with pilot projects in major industrial cities. Further cementing the role of cutting-edge technology, the "AI Plus" initiative, unveiled in 2024, focuses on embedding AI across industrial processes to enhance decision-making, quality control, and operational efficiency. These initiatives have resulted in hundreds of national and provincial-level smart factories and digital workshops showcasing AI integration.
Perhaps the most striking manifestation of China's automation drive is the rise of "dark factories" or "lights-out factories". These facilities operate entirely without human intervention, and are powered by AI, robotics, and advanced sensors. Because they eliminate the need for human comfort and safety infrastructure like lighting, heating, and break rooms, they can operate 24/7, dramatically increasing production capacity and throughput. They also boast improved quality control, with AI-powered systems achieving precision that surpasses human capabilities. Xiaomi's smart factory in Changping, for instance, reportedly produces a smartphone every 3 seconds without human workers. Similarly, sections of Zeekr's electric car factory in Ningbo are "dark factories," where hundreds of robots perform complex welding tasks autonomously. Even smaller workshops are adopting robotic arms with AI to automate tasks previously done manually.
This automation is about fundamentally changing the economics and capabilities of manufacturing. Building an equivalent robot arm in the US costs more than twice what it does in China, thanks to locally optimised supply chains and component industries. The country dominates critical components such as gears, permanent magnets (90 per cent of global capacity) and battery cells (80 per cent of global output). The country's control over the mining and processing of essential minerals, including rare earth metals, is also significant. This control over the supply chain makes it difficult for other countries to compete in manufacturing at scale.
Beyond traditional industrial robots, China is investing heavily in general-purpose and humanoid robots. Startups like Unitree and UBTech have already brought affordable models to market, aiming for mass production by 2025, while State-backed funds pour into research on AI-driven dexterity and autonomy. This contrasts sharply with Western companies, many of whom are seen as hesitant to invest heavily in riskier next-gen robotics. US technology ecosystem, with its digital monopolies operating in the virtual world and making super- profits, has little incentive to invest in this cut-throat manufacturing competition despite the Trump tariffs.
China's automation push is a proactive strategy to solidify its manufacturing dominance. By lowering costs, improving quality, and increasing capacity through automation, China is better positioned to absorb tariff costs and outcompete rivals on a global scale. The ability to iterate product development rapidly, enabled by nearby manufacturing capacity and affordable costs, is a key luxury China enjoys. This production flywheel, where robotics systems manufacture more robotics systems, continuously drives down costs and improves quality, making it difficult for competitors to catch up.
Contrast this with India's approach to self-reliance. While the Modi government has made loud proclamations about “Atmanirbhar Bharat” and Make in India, including announcing $10 billion incentive schemes to set up advanced semiconductor manufacturing plants in India, not much progress has been made in this regard. For the Modi government, all that matters is that production takes place in India by offering access to cheap labour. Self-reliance meant not only that the final production takes place locally, but both the knowledge and the equipment required for production are also indigenised. The Modi government does not recognise that people and knowledge are key in technology development today.
In spite of optimism in the Indian ruling classes that India would become the primary beneficiary of Western efforts to decouple or atleast “derisk” their reliance on China for manufacturing, these hopes have been belied as even the Government of India’s Economic Survey for 2024 was forced to admit saying “To boost Indian manufacturing and plug India into the global supply chain, it is inevitable that India plugs itself into China’s supply chain. Whether we do so by relying solely on imports or partially through Chinese investments is a choice that India has to make.”
India can draw crucial lessons from China's strategic leap. China's success stems from a sustained, multi-year national strategy backed by massive government investment and clear objectives for technological self-sufficiency. It didn't just rely on attracting foreign companies for cheap labour; it focused on building its own industrial base, developing indigenous knowledge, equipment, and core components. For India to truly achieve self-reliance and compete in the new labour economy, it must go beyond simply attracting assembly operations. It needs to significantly increase investment in public education and research to build the necessary skilled workforce and indigenous technological know-how. Establishing robust technology transfer regimes and focusing on developing domestic capabilities in critical areas like robotics components, AI, and advanced materials is essential. China's journey demonstrates that a deep, integrated approach to building technological and manufacturing capacity from the ground up, driven by a clear national strategy and significant investment, is the path to our manufacturing revival.