Welcome to the first episode of The Wire China podcast, in which we will take you behind the scenes of the stories we cover each week in our magazine, thewirechina.com.
In this episode, news editor Andrew Peaple talks to reporter Rachel Cheung about her latest cover story on China's fast-growing robotaxi industry, and whether a recent spate of accidents involving self-driving cars will drive the sector off course.
We also have an extract from our latest Q&A, with Chinese economist David Daokui Li, and a guide to the other articles you can read in this week's edition, which you can read at thewirechina.com.
Transcript
Andrew: Welcome to The Wire China Podcast.
I’m Andrew Peaple, the Wire’s news editor, based just outside London in what today is a rather damp UK. The Wire China is a weekly digital magazine dedicated to understanding and explaining one of the biggest stories of our time, China’s economic rise and its influence on the world. And in this podcast, we’ll be taking you behind the scenes of our stories that we cover each week.
In this, our first edition, we’re going to discuss the fast-growing robotaxi industry. It’s yet another area of tech where China seems to be making rapid advances. Yet a string of accidents, the latest in a major city in Hunan province just last month, have drawn attention to the serious risks involved.
Our Hong Kong-based reporter, Rachel Cheung, joins me this week to talk about her new cover story on robotaxis and how this industry is developing inside China. Later on, we’ll have a clip from our latest Q&A, which this week is with the Chinese economist David Daokui Li, as well as an overview of what else is coming up in the magazine. But first, let’s talk about robotaxis.
And Rachel, it’s great to have you join us this week.
Rachel: Hi, Andrew. Glad to be here.
Andrew: Well, Rachel, let’s dive straight in. What’s exactly happening on the roads in China right now? How common are robotaxis already? And are they any good?
Rachel: So in terms of operational robotaxis, we’re looking at three to four thousands across China. They’re mostly still in leading cities like Shenzhen, Guangzhou, and Wuhan, and still in limited areas, certain districts rather than being citywide.
In terms of permits, they could now carry passengers, charge fares, and some are completely driverless. Meaning you don’t have a physical driver in the cabin, and it’s entirely just a passenger. In terms of estimates by companies and banks, that number is set to triple this year.
So we might be looking at 11,000 units by the end of the year. As for whether they’re any good, I would say different cars have different driving styles. The development of autonomous driving has been slower and more challenging than a lot of people have expected.
But now in the era of generative AI, we’re getting pretty close. What they could do is, for instance, they could bypass obstacles, switch lanes on its own. They’re pretty smooth.
There are still going to be kinks that need to be ironed out. Safety is going to be a key concern. And then we’ll also have to look at the business models.
Andrew: How fast can they ramp up? How fast can you get a robotaxi, for instance? Or do you have to wait for a long time? And I think a lot of this will hinge on regulation as well. And if you take a ride in a robotaxi, is it about the same price as a normal taxi? What are we talking here? Is it cheaper, more expensive?
Rachel: In China, it’s slightly above your usual taxi fare. But I will remind you that China is one of the cheapest places in the world to get a taxi.
So the robotaxi companies have been subsidizing these rides a little bit. I think there might come to a point where they could be priced below taxis. They’ve tried to roll that more quickly.
For instance, in Wuhan, Baidu has priced it beneath taxis. But I think that risks getting pushback from human drivers.
Andrew: You mentioned Baidu there. What are some of the other companies that are involved in this industry so far?
Rachel:I think a lot of our listeners would probably know Waymo by Google. In China, there are three major players. There’s Pony AI and WeRide.
They’re both companies from Guangzhou that have both listed in the US and have had secondary listings in Hong Kong. And then there’s also the pioneer, which is Baidu’s Apollo Go. Last year, or at least in recent years, because the technology is maturing, the market is almost ready.
We’re also seeing some smaller new entrants in this field. So it’s a pretty dynamic area. But as I said in the introduction, and your story is going to cover some of this, there’s been some accidents recently involving robotaxis and autonomous driving inside China.
Andrew: How’s that going down? What’s been the reaction to that to date? And do you think it’s something that’s going to maybe hinder the development of this industry?
Rachel: So there have been various accidents. For instance, in Wuhan, Baidu’s vehicle accidentally hit a jaywalker in 2024. I think that was only left a minor injury.
More recently, one Baidu vehicle last year fell into a construction pit. I think in December, we’ve had the most serious accidents so far, which is one vehicle run by Hello, this newer company. It ran over two pedestrians.
We don’t have a lot of details about the accident yet, but this is the most serious one so far. And it has been compared to an accident in the US where crews hit a pedestrian and almost killed her. So these accidents do happen.
Andrew: And what we’re watching is how is the Chinese government going to react? How have they reacted so far then?
Rachel: What we’re seeing is this push and pull between central ambition and local caution. So safety is one factor that local governments are going to be very concerned about. I think for the latest accident, for instance, it has dampened enthusiasm a little bit.
You could see local authorities perhaps being less enthusiastic about rolling out these robotaxis or perhaps slowing the release of the permits or the deployment of these robotaxis. But another thing that they would have to watch out for is pushback from human drivers because this ride-hailing sector is absorbing a lot of excess labor supply in China. If you are deployed too quickly, then you might get a backlash from this community, as we’ve seen in Wuhan in the summer of 2024 when Baidu first launched and deployed quite aggressively across the city.
So what China really wants is an orderly rollout. Autonomous driving and robotaxi is part of its AI vision. So it does want this technology on the road.
But given these different forces at play and considerations, I think with robotaxi, what we might see is a two-step forward, one-step back situation where they’re going to be quite cautious about the pace and want to make sure the entire technology, its impact, everything will be under control.
Andrew: Yeah, that’s really interesting because this is coming at a time, I guess, when there’s concerns about unemployment in China, particularly amongst young people. So I guess they’re pretty worried about robotaxis maybe replacing the entire taxi industry, right?
Rachel: I think if you look at the estimates right now, when we talk about the entire taxi industry, the entire ride-hailing industry, we’re talking about millions of drivers, even according to the most optimistic estimates, in reality, robotaxi is still a very small percentage of that.
So I think the actual impact, at least in the next five years, it’s going to be limited, but it is a very visible impact. When you have these robotaxis on the road and you have drivers unable to find jobs, unable to find passengers, getting squeezed by these ride-hailing platforms, earning lower and lower fees, you will get a bit of discontent. And I think that is something local authorities would have to manage.
Andrew: Now, Rachel, I guess it’s pretty hard to gauge public opinion in China, but what’s your sense of how this is going down with ordinary people? Are they keen on robotaxis? Are they keen on driverless cars and getting into a driverless taxi?
Rachel: I haven’t found really good consumer survey to give us an idea or a very statistical measure of what consumers’ demand looks like. But I think people are quite open to it. When we look at other consumer surveys about Chinese consumers’ attitude towards technology, they’ve known to be very open-minded, especially compared to other foreign markets.
And I imagine when it comes to robotaxis, it might be the same. But I have also spoken to people that are more conservative, that think it will take a longer time and that have more concerns about safety.
Andrew: I guess outside China, there’s often an assumption that when industries like this get going, it’s because they’re getting a lot of government support, a lot of government funding maybe, or loans on favourable terms, that kind of thing.
And we’ve seen it in the past. Maybe the industries enjoy tax breaks like the electric vehicles did for many years. Is that what’s happening here as well? Is there a lot of government support for this area that you can see?
Rachel: So in terms of subsidies or that kind of financial support, I don’t think we’re seeing a lot.
I think where the biggest support comes in might really be the regulatory landscape, offering some green lights, slashing red tape. In this area, I’ve been told that China is on a pretty similar level compared to the US, where you’re also seeing the government try to slash red tape, allowing way more cars in certain cities like San Francisco and Austin.
Andrew: That’s interesting that you bring in that comparison with the US there. Again, what’s your overall sense of where we are here? So many areas of tech, where we talk about China and the US being in competition. If we extend that competition to the area of robo taxis and autonomous driving, who do you think’s ahead at the moment?
Rachel: There are some headlines that suggest China is ahead based on numbers, but I would say it’s way too early to decide who’s winning. When it comes to technical benchmarks, it would seem that Google’s Waymo, which has been the pioneer in this industry for a long time, is still superior compared to the Chinese players.
But Pony AI and We Ride are pretty close. A big caveat is that it’s very hard to make these Apple to Apple comparisons when they are not operating within the same domain and they have different ways of calculating, measuring data. Funny thing is London is going to be the first place where you’re going to see some head-to-head competition and maybe that’s a place, Andrew, you could try out. But the other thing I’m going to say about China-U.S. tech competition and how it plays out in this area is China and the U.S. are both watching each other very closely and fighting for the bragging rights of being a leader in robo taxi. That means, for instance, the U.S. is revisiting rules of self-driving cars and potentially simplifying regulatory insight.
In April last year, when they started bringing this thing up, U.S. officials made it very clear they’re doing this for the purpose of out-innovating China and making sure the Chinese rivals can’t catch up with them. And if the U.S. goes through with this, you might expect something similar from China.
Andrew: Rachel, maybe you could come to London and come on a reporting trip and tell us how the head-to-head plays out.
Rachel: I would love that.
Andrew: Well, thanks so much for talking to us about this topic, Rachel. It’s absolutely fascinating and we’ll look forward to your cover story coming out this Sunday.
You can read that full story on our website, thewirechina.com, where you’ll also find our latest Q&A. This week, it’s with David Daokui Li, someone who’s advised a number of Chinese leaders over the years. And in the interview, he talks about what he now sees as China’s biggest economic vulnerabilities.
Here’s an extract from that interview.
David Daokui Li: In a short while, the single most important issue is local government debt. Okay, you must be puzzled.
Why? Why is local government debt now hurting consumption, okay? Let me explain to you why. The local governments are the biggest spenders in our economy. They spent in a normal year three years ago, until three years ago, they spent as high as 41% of our GDP in the form of social welfare and also in the form of infrastructure investment.
However, this single most important engine of economic growth is now slowing down because they have accumulated too much debt. The total debt of local governments is about the same size of the GDP. Local governments cannot even service the debt, okay? Let alone pay back the debt.
They cannot even service the debt, the interest payments of debt. And therefore, local governments for the past three years have been shrinking. They are squeezing enterprises for taxation.
They’re also delaying payments to many, many enterprises as high as 7% of GDP in delayed payments by local governments. And also they are delaying bonus payments or sometimes eliminating bonus payments to their local government employees. So in turn, households who provide labor service to enterprises, right, are getting the pain.
Households are not getting enough jobs because enterprises are shrinking. Because households do not get enough salary or bonus in payment because their enterprises, their employers are getting delayed payments by local governments.
Andrew: You can read the full interview with David Daokui Li on our website this week.
That’s thewirechina.com where you can find all our other stories as well. We’ll have Rachel’s cover story, obviously, on robotaxis. We’ll have another vehicle-related story looking at whether Chinese EVs will ever be accepted into the US market.
We’ll have a big picture, our normal big picture feature, which is this week on China’s housing market and our normal opinion column. So please do go to thewirechina.com to take a look. And in the meantime, thank you for listening and goodbye.
Transcribed by TurboScribe.ai.
