China won't fail and here is why.

China's robot density went from 97 to 372 per 10,000 workers in the manufacturing industry iin the course of 5 years. Unlike what happened with Japan, South Korea and China are both prepared for their population decline. It isn't the population decline that would crush the Chinese economy, if anything, it would be the property market ( which makes up 30% of Chinese GDP ) collapse that is at higher risk of crashing the Chinese economy.

https://ifr.org/news/china-robot-installations-grew-by-44-percent

China is all in on optimizing for as many robots as they can fit in every nook and cranny. Nobody is more enthusiastic about putting in more manufacturing robots than China and South Korea.

China's robot density will easily cross that of Germany and Japan by the end of the decade.

Currently South Korea with the highest robot density in the world is growing at a rate of above 2% per year still.

If ever increasing automation can keep South Korean economy afloat, then it can also keep Chinese economy afloat.

Currently 29.1% of China's workforce is in the manufacturing sector. China at current rates could easily replace all those workers with automation before those workers end up leaving the job sector.

Chinese AI is also only a few years behind the US, far back enough to be unable to compete with the US as number 1, but ahead enough that they can also carry their own loop of AI, GPU, and semiconductor industry growth leading to ever better AI systems across China.

There is no doubt that Chinese GDP growth will fall as low as 3%, but there is very limited likelihood of it falling as low as 1%.

Automation has made it impossible for nation states economy to collapse due to population decline in the nation states that participate in mass automation of their industries.

Robotics is to physical labor what computer software was to paperwork.

https://en.wikipedia.org/wiki/Lights_out_(manufacturing)

FANUC, a Japanese robotics company, has been a lights-out factory since 2001.[6] Robots are building other robots at a rate of about 50 per 24-hour shift and can run unsupervised for as long as 30 days at a time. "Not only is it lights-out," says Fanuc vice president Gary Zywiol, "we turn off the air conditioning and heat too."[6][7]

The future is here, and it has made global population loss meaningless and the requirement for unskilled labor meaningless.

China is going to survive, and the only way to beat it is going to be to out compete it by the west, which means remaining competitive for decades to come and making actual product that has utility.

Conclusion:

China's industrial robotics market is growing at a far faster rate than the population decline in China. This means that China's collapse will not occur due to population loss over time irrespective of demographics. China's property market is the biggest risk to the Chinese economy currently, along with yearly flooding that China hasn't solved for so far.

Edit:

According to an MGI report, AI-led automation can give the Chinese economy a productivity injection that would add 0.8 to 1.4 percentage points to GDP growth annually, depending on the speed of adoption.

https://www.mckinsey.com/~/media/mckinsey/featured%20insights/China/Artificial%20intelligence%20Implications%20for%20China/MGI-Artificial-intelligence-implications-for-China.ashx