BEIJING ― Chinese firms face a unique challenge: Beijing wants companies to adopt artificial intelligence fast enough to transform productivity, but not so fast or visibly that workers are pushed out in numbers that threaten social stability while companies around the world are grappling with AI adoption.
Their strategy contrasts with massive AI-linked job cuts announced by major global companies, including Meta, which have triggered a wave of anti-AI populism in the West.
Companies seeking to avoid mass layoffs
Under Chinese labor laws, companies must seek government approval for job cuts exceeding 10 percent of their workforce, and Chinese courts have in at least three cases ruled against companies that dismissed workers to replace them with AI.
"Private companies will need to make room for some level of inefficiency in order to avoid mass layoffs that would prompt 'social instability' and could have political ramifications," a senior manager at a big Chinese fintech company told Reuters.
The person said restructuring is already happening at every big tech firm in China, with marketing and front-end jobs largely replaced by AI.
An engineer at Alibaba's cloud division also said AI-driven headcount reductions have begun in parts of the company and are likely to unfold through gradual cuts and attrition rather than a single mass round of lay-offs.
He Shujing, a senior analyst at consultancy Plenum, said big Chinese tech firms remain in an "all-in phase" on AI.
"The productivity gains from AI will likely reduce hiring needs, but large companies are expected to be cautious about making direct workforce cuts."
AI performance target
Some firms are not only using AI to replace tasks and roles but also measuring whether workers are adopting it fast enough. Employee use of tokens, a unit of AI compute consumption, is being measured in some workplaces to estimate efficiency.
Entertainment is among the industries most heavily disrupted, as low-budget micro drama studios shift to AI-generated actors and sets.
"We had 30-40 people in our production department. After the transition (to AI), each group was cut down to about 10 people, with only two remaining for live action filming," said Ayase, a 22-year-old micro drama producer who was fired in February.
"With live-action, a single actor costs thousands of yuan per day, even for a minor role with just a few lines," she said.
AI boom, jobs squeeze
Beijing's "AI Plus" initiative targets 70 percent AI adoption across key sectors by 2027 and 90 percent by 2030, and analysts warn there will be a difficult transition period.
They say the speed of AI-driven job creation lags behind the speed of job displacement, while China is already wrestling with a high youth jobless rate, with early-career workers disproportionately exposed to AI automation.
While AI-related job postings surged 74 percent in 2025, this boom belies a struggling wider market where a record 12.7 million university graduates face declining entry-level pay and fewer jobs.
Citibank estimated in a recent report that 9.6 percent of all Chinese jobs are at high risk of AI-driven displacement. That risk rises to 13.6 percent for workers in their 20s.
"AI sits at the center of China's (economic) transition in a particular way: it is simultaneously a driver of the disruption and the proposed solution to it," said Selena Guo, social policy analyst at advisory firm China Policy.
"Wide-scale AI adoption is needed to achieve industrial efficiency (and) accelerate innovation.... The hope is a positive snowball effect on productivity and growth."
Chinese state media have attempted to reassure workers that AI is not "stealing people's rice bowls." Officials are currently studying the impact of AI on employment and reskilling plans, but they have yet to issue a detailed policy response.
The hashtag "AI anxiety" gained over 7.8 million views on Chinese social media app RedNote, where users debate whether AI will make them obsolete like the 19th-century European weavers who lost their jobs to power looms.