A Reuters analysis and accounts from company insiders indicate that Chinese firms are steadily replacing skilled workers with artificial intelligence (AI), often via quiet, incremental measures. One widely used AI agent cited in the reporting is OpenClaw, which observers say can substitute for many human tasks.
An outside contractor working for a large Chinese internet company based in the Hangzhou/Guangzhou region told Reuters that the employer began quietly laying off subcontractors in March after mandating the use of AI tools; according to this source, once an employee records all workflows into the software, they become effectively replaceable.
Government goals and social risk
Beijing is pushing for broad AI adoption to transform productivity, industry efficiency and innovation. At the same time, authorities want to avoid rapid, highly visible dismissals that could spark social instability. Demographic pressures — a shrinking working-age population linked to the one-child policy and an ageing society — make managing unemployment particularly sensitive.
Under Chinese labour law, companies must seek government approval for layoffs that exceed 10 percent of their workforce. A leader at a large Chinese fintech firm told Reuters that private companies should tolerate some loss of efficiency to avoid mass redundancies that might have political consequences.
How companies are implementing the shift
Sources say firms are exploiting AI-driven productivity gains while executing workforce reductions in small, discreet steps to avoid triggering regulatory scrutiny. This approach contrasts with some US big tech firms that have conducted large waves of layoffs.
Beyond automating tasks and roles, companies are measuring employees’ adoption of AI. Some firms deploy so-called tokens to rank staff by AI usage, tying those metrics to performance reviews and promotion prospects. A big data engineer at a Chinese tech giant said such ranking began in March and added that worries about failing to adopt AI have made some employees fear replacement.
Sectors most affected
Marketing and front-end roles are particularly exposed: structural changes at major tech firms have seen these positions largely replaced by AI. An engineer in Alibaba’s cloud unit said gradual layoffs related to AI adoption have already started in some parts of the company.
The entertainment industry also faces disruption: AI algorithms can produce videos with synthetic actors, a far cheaper alternative to hiring live performers for small roles.
Some agent-style AI platforms are explicitly marketed to substitute entire departments. For example, Wukong, Alibaba’s multi-agent enterprise AI platform, is designed to automate tasks such as e-commerce sales, live streaming operations and parts of software development.
Disproportionate impact on young and entry‑level workers
The Reuters piece highlights that young and early-career workers are disproportionately vulnerable to AI-driven automation, while China already faces high youth unemployment.
Key figures cited in the reporting:
- AI-related job postings increased by 74 percent in 2025.
- A record 12.7 million university graduates were seeking jobs.
- Citibank estimated that 9.6 percent of Chinese jobs — approximately 70 million people — face high risk of AI-triggered displacement.
- For workers in their twenties, that risk rises to 13.6 percent.
These data suggest that, although AI deployment may be necessary for industrial efficiency and innovation, the pace of job creation by AI is lagging behind job losses, with significant consequences for new labour-market entrants.
Consulting industry and broader economic effects
AI is penetrating higher-value services as well: core processes at consulting firms such as Deloitte, PwC, McKinsey and Accenture are coming under pressure from AI capabilities, even as smaller AI-native firms scale rapidly. The consulting sector expects fundamental changes in advisors’ work, pricing and employment in the coming years.
Overall, Reuters’ analysis and company accounts portray a picture of incremental AI adoption across Chinese industry: firms and the government alike are attempting to balance productivity gains from AI with the social risks posed by rising unemployment.
