Higher wages due to growing affluence and the one-child policy prompts move towards use of robots to fill the lower-paid jobs left behind

In China, there's no better time to be a robot. Pictures from last week's International Industry Fair in Shanghai show them duelling with lightsabers, playing ping pong and dancing in lion costumes. One shows a female robot in a white wool coat shaking hands with a visitor.

According to the Frankfurt-based International Federation of Robotics, China could become the world's biggest consumer of industrial robots by 2014, with demand reaching 32,000 units. Gudrun Litzenberger, the organisation's general secretary, has described China as the fastest-growing robot market in the world.

China has many reasons to embrace industrial robotics. Robots can improve energy efficiency and perform operations that would prove impossibly complex for even the best-trained humans. But the most important reasons are shifting demographics and basic economics: China's working-age population is shrinking, sending labour costs spiralling upwards.

"There aren't many young workers coming off the streets to fill jobs at factories. That's why you're seeing factory wages going up, and factories struggling to hire trained staff," said Geoff Crothall, a spokesman for the Hong Kong-based China Labor Bulletin. "It's not surprising that you'd see greater focus on greater automation of production."

Nice to meet you. A robot greets visitors at the fair. Photograph: Pei Xin/Xinhua Press/Corbis

China's growing affluence and family planning laws have had dramatic effects on its workforce. Improved medical care has enabled older generations to live longer, and the one-child policy has effectively capped the younger generation's size.

In 2000 there were six working-age citizens for each Chinese person aged 60 and up; 20 years from now, population experts predict, there will be only two. Young Chinese have no choice but to seek skilled, high-paying work to support their parents. They're better educated than their forebears, and less interested in menial assembly-line labour. Robots may fill the jobs they've left behind.

China still ranks low on the global robotic hierarchy, according to the state-run China Daily. Last year, there were 21 robots for every 10,000 workers in China, compared with a global average of 55. Japan has 339 robots for every 10,000 workers; Germany has 251.

This is changing. The Taiwanese manufacturing giant Foxconn has revealed plans to boost its fleet of industrial robots from 10,000 to 1m within three years. According to the company's CEO, Terry Gou, robots will replace workers for tasks such as spraying, assembling and welding.

An industrial robot demonstrates spraying at the 2012 fair in Shanghai. Photograph: Zhu Lan/ Xinhua Press/Corbis

Chinese officials have openly championed the industry's growth. The Shanghai municipal government has called robotics "one of its major industries", wrote the China Daily. At a press conference on Monday the vice-minister for human resources and social security, Yang Zhiming, emphasised the need to "upgrade equipment and technology".

Where the government sees potential, Chinese firms see the potential for incentives. "China needs to subsidise its own enterprises – to improve its own equipment manufacturing, and to make sure that its own enterprises can compete with foreign technology," said an employee of the Shanghai-based SIASUN Robot and Automation Company. The employee said SIASUN had not yet received subsidies from the Shanghai government, but that a deal may be in the works.

Even outside the factory, robots – jiqiren in Chinese, literally "mechanical people" – have proliferated in China, many of them homegrown. China's National University of Defence Technology unveiled the country's first bipedal humanoid robot in 2000, after more than a decade of research. Chinese media lauded the block-headed robot as a technological advance, but its slapdash appearance – and the unfortunate placement of a protruding joint – made it the brunt of online jokes in tech-savvy Japan.

A Chinese farmer, Wu Yulu, shot to fame in 2009 for building robots that could pull rickshaws, climb walls and light visitors' cigarettes. One local television station dubbed him "China's cleverest farmer inventor", according to Reuters. In 2010, a hotpot restaurant opened in coastal Shandong province with more than a dozen Star Wars-style droids as entertainers and hosts.

In March, a Chinese restaurateur launched a line of £1,200 robots that can slice thick-cut noodles out of blocks of dough.

"Following the market's increase in demand for talent, young people aren't willing to do such dirty, tiring work," the restaurateur, Cui Runguan, told Zoomin.TV. "So not only in sliced noodle restaurants, but also in many other regards, we'll follow our technological development – and there will be many, many machines that can replace human labour."