Five minutes after being ordered on an app, a taxi arrives outside a small McDonald’s on the edge of Shanghai. There is no welcome from a driver, because there is no driver. After entering a pin code into a panel on the rear door and jumping into the back seat, a disembodied voice from a speaker gives an instruction to put on seatbelts. The car then indicates and swings itself into the slipstream of traffic.
This could be a scene from a science-fiction film, but it has become reality in 20 cities across China, where pilot trials of these robotaxis are currently being run in geofenced areas, including in Shenzhen, Guangzhou and Beijing. The US is the only other country to operate similar large-scale schemes.
A September report by HSBC says the robotaxis are working smoothly in many of the Chinese cities. Cheaper sensors, more processing power and bigger datasets are improving algorithms. This, coupled with continued regulatory support, is helping to build scale.
The pace of commercial driverless car development in China is a boost for the country as it battles the US for global supremacy in technologies of the future. But it is also bringing into focus a thorny problem of labour dislocation as human jobs are lost to robots, potentially forever.
Both HSBC and Goldman Sachs are forecasting the rapid and irreversible ascent of autonomous vehicles, a scenario that could threaten the jobs of more than 7.5mn drivers working for ride-hailing services — mostly DiDi, China’s version of Uber — as well as millions more driving scooters, vans and trucks as part of the country’s massive ecommerce and logistics sector.
According to Caixin, a Chinese business news service, delivery drivers from just two companies, Meituan and Ele.me, totalled more than 11mn. Many such people are internal migrant workers who lack the same job and social security as white collar and state sector workers.
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According to Goldman Sachs, China’s nascent robotaxi market is expected to rise from $54mn this year to $47bn by 2035. The fleet size of driverless taxis will reach 1.9mn by 2035, capturing 25 per cent penetration of the broader taxi market, compared with 4,000 vehicles and a 0.1 per cent market share this year.
In the early stages of the rollout, heavy discounts are being offered to entice more users — the drive in Shanghai was free.
HSBC expects the robotaxi fleet to grow tenfold over the next two years and, over time, for robotaxis to offer up to a 20 per cent discount compared with taxi and ride-hailing services.
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In a recent column, Pan Helin, a prominent economist and commenter affiliated with Caixin, described the potential replacement of human labour by robots as both “painful” and “inevitable”. The question, he said, was who would be replaced first.
Pan, who is a fellow at Zhongnan University of Economics and Law and adviser to the Ministry of Industry and Information Technology, has forecast that workers in industries with a low barrier to entry and repetitive labour will be replaced first.
“If autonomous driving is truly more efficient and safer than humans, then replacing humans is only a matter of time. The same applies to factory assembly line workers, food delivery drivers and couriers,” he wrote.
However, Pan also noted a potential constraint on the pace of labour dislocation in these sectors that was both “cruel and simple”: many people cost less than machines.
If autonomous driving is truly more efficient and safer than humans, then replacing humans is only a matter of time
Pan Helin, economist
Compounding the problem for policymakers in Beijing, taxi and logistics drivers are one of a panoply of industries where technological disruption poses an existential threat.
China has over recent weeks pledged to further improve social welfare for a country of 1.4bn people as part of its next five-year economic plan, which will be formally released early next year, but has so far been short on details of exactly what that will entail.
Shen Xinyi, who leads the China team for the Centre for Research on Energy and Clean Air think-tank, expects the government to provide more basic support to help households through what will be a years-long transition period across many different industries in China. But she notes that there may be no easy way to ensure a smooth transition for many workers given the different skill sets, knowledge and experience.
“If you want to grow a new industry or new technology, you have to bear or tolerate the collapse of the old industry,” she says. “This is the process that the whole of society needs to go through to restructure the economy and to make a more innovative future.”
Dan Wang, a director of the China team at US think-tank Eurasia Group, says that from her conversations with Chinese policy officials, many new technologies will substitute, not complement, the labour market.
Beyond the government’s promises to strengthen the safety net, Wang says, Beijing appears to be relying on existing “buffers”, including China’s extremely high rates of home ownership and household savings.
2.2mn
Apollo Go’s fully driverless rides in second quarter
“This could create a very long time window for any family to survive, even with one or two unemployed workers,” she says, adding that Beijing may not intervene more in addressing the short-term labour market issues “unless it is jeopardising social stability”.
In the short term, China’s transport and logistics sectors are powering ahead with the mass adoption of automation, a transition they see as key to cutting costs and boosting profitability.
Cainiao Group, which is the logistics arm of ecommerce giant Alibaba, for example, expects more than 200,000 unmanned vehicles to be deployed before the end of the decade. The company said late last year that it had already delivered 40mn parcels using driverless vehicles.
Apollo Go, the robotaxi unit of tech giant Baidu, which is China’s biggest search engine company, says it has surpassed 14mn cumulative rides and in the second quarter alone provided more than 2.2mn fully driverless rides.
Asked whether the company is doing anything to help offset the potential negative impact on the labour market from its technology, Apollo Go says that the autonomous driving transition “currently complements, rather than replaces, existing transport options”.
The company adds that new job opportunities will come from the autonomous vehicle ecosystem, including roles in monitoring, testing and maintaining these systems, as well as annotating data to improve their safety and performance.
On the streets of downtown Shanghai at least, one 44-year-old taxi driver, surnamed Qin, who has been driving a taxi for more than 20 years, shrugs off the experts’ bleak outlook for his profession.
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Cruising in a red and white sedan in Xintiandi, near the site of the Communist party’s first congress in China in 1921, Qin says that the public is not ready to adopt driverless cars en masse, because of fears of any deaths or injuries caused by machines that drive themselves.
He points to the recent public outrage when three people were killed earlier in the year in an accident involving a Xiaomi electric car with semi-autonomous capabilities. Indeed since this accident, Beijing has been looking to tighten oversight of cars with high levels of autonomous driving capability.
When pressed about the prospect that one day the technology will probably make drivers surplus to requirement, he says this would be many years away and, in any case, he trusts the state will provide. “The state will take care of me.”
Beijing’s handling of this looming labour dilemma will be watched closely. With companies like Apollo Go and many Chinese and foreign rivals looking to expand their robotaxi services rapidly in Asia, Europe, US and the Middle East, automation could have repercussions for the jobs of taxi and logistics drivers globally.
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