Chinese humanoid AI robots are on the march. A year ago, they were highly sophisticated novelty acts, performing acrobatics on social media platform TikTok and doing synchronised kung-fu on TV.

Now, according to a new analysis by investment bank Morgan Stanley, they are moving into real jobs in factories and beyond.

This will fuel twin paranoias: about AI’s destructive potential and about China overtaking the West in tech.

So-called ‘embodied AI’ has a physical form such as a robot, a drone, or a driverless car, as opposed to a purely digital existence.

Morgan Stanley’s experts focus on the implications that the rise of the robots may have on investors and markets.

What might it mean for investors in the West if Beijing wins the robot race?

Maybe there was a clue in 2025 when China’s DeepSeek sent shockwaves through Silicon Valley by claiming it had built powerful AI for a fraction of the costs run up by US rivals.

Initially, $1trillion was wiped off shares including a near-$590billion hit to chip designer Nvidia.

That panic soon evaporated but future scares may be better-founded and may not dissipate so quickly.

China has a lead on the production of humanoid robots and its firms are scaling up faster than anywhere else in the world, helped by government subsidies.

Plans are in place to deploy robots across more than 100 ‘high-value’ scenarios by the end of this year, starting in industry and logistics.

Production is relatively cheap and Beijing has access to the rare earth minerals needed to build the robots.

US companies in the fray include Tesla. It is developing a humanoid robot called Optimus, which Elon Musk says could be the biggest product ever.

Boston Dynamics, a spin-out from MIT now owned by South Korean car company Hyundai, has developed a humanoid called Atlas that can work on motor assembly lines, and Spot, a robot dog that patrols industrial plants.

Even in the UK we can stake a claim to the territory. London-based Google DeepMind doesn’t make humanoids but is developing their AI ‘brains’, including for Atlas.

Humanoid, a start-up with headquarters in London, is the first robotics ‘unicorn’ in Europe, valued at more than $1.35billion(£1billion) after a recent funding round.

Cornwall, a location better-known for beaches and cream teas, is the home of Engineered Arts.

The company, based in Falmouth, created Ameca, a robot whose forte is social interaction and customer service. But if China does succeed in dominating the market for humanoids (and there is a sentence I never thought I would write), the dangers would extend far further than the commercial sphere.

There is an obvious threat to jobs. Robots could take on work that is difficult and dangerous for people, but they could also throw humans on the scrap heap.

They are capable of physical attacks and of causing accidental harm. They might spy on us, malfunction, be hijacked, form armies or simply run out of battery before they finish their shift at the car factory.

Software-based AI has a disconcerting tendency to lie, cheat, fabricate and defy its human ‘controllers’.

‘Embodied’ AI, whether produced in China or elsewhere, has potential for danger because of its physical form.

It plays into that lurking Gothic terror of humanoids running amok like Dr Frankenstein’s monster.

Robots are coming whether we like it or not. Perhaps the question is whether democratic societies can control them, before they control us.