In the bustling tech hub of Hangzhou, 26-year-old contractor Liu watched her workload shrink dramatically earlier this year. Her employer at a major Chinese internet company began mandating the use of advanced AI agents like OpenClaw — a tool that has seen explosive adoption across the country.
Tasks that once took teams of people days to complete could now be handled by AI in minutes. By March, the quiet firings started.
“The tasks most people do can be completely replaced by OpenClaw,” Liu said. “After a person writes all their workflows into OpenClaw… they can basically be fired.”
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Liu is far from alone. Across China’s tech, entertainment, and advertising sectors, companies are implementing small-scale, discreet layoffs and hiring freezes as they accelerate AI adoption. Nine workers interviewed by Reuters described a pattern of gradual headcount reduction designed to avoid triggering government scrutiny or public backlash.
This behind-the-scenes restructuring stands in sharp contrast to the high-profile, large-scale AI-linked job cuts announced by Western giants like Meta, which have fueled anti-AI sentiment in the U.S. and Europe.
Beijing faces a delicate balancing act. The government’s ambitious “AI Plus” initiative aims for 70% AI adoption across key sectors by 2027 and 90% by 2030, viewing the technology as essential for boosting productivity and sustaining economic growth. Yet officials are acutely aware of the social risks. Under Chinese labor laws, companies must obtain government approval for layoffs exceeding 10% of their workforce, and courts have ruled against firms that openly replace workers with AI.
A senior manager at a major Chinese fintech company explained the internal calculus, saying: “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.”
This cautious approach reflects deeper structural realities. China is already grappling with a high youth unemployment rate, and early-career workers are disproportionately exposed to AI automation. Citibank estimates that 9.6% of all Chinese jobs, roughly 70 million positions, are at high risk of displacement, with the figure rising to 13.6% for workers in their 20s. At the same time, a record 12.7 million university graduates entered the job market last year amid declining entry-level pay and fewer opportunities.
Token Usage as Performance Metric
Some firms are going further than just reducing headcount — they are measuring AI adoption itself. A big data engineer at one Chinese tech giant said his manager began ranking employees by token usage (a measure of AI compute consumption) in March, with the metric now tied to performance reviews and promotion prospects.
“It is relatively forced. One should not use AI for the sake of it,” he said on condition of anonymity. “I still can’t shake the feeling that I’m getting closer to being replaced.”
The entertainment industry has been hit particularly hard. Low-budget micro-drama studios have shifted aggressively 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. With live-action, a single actor costs thousands of yuan per day, even for a minor role with just a few lines,” Ayase, a 22-year-old micro-drama producer who was let go in February, said, describing the scale of change.
Chinese authorities are walking a careful line. State media has run articles reassuring workers that AI is not “stealing people’s rice bowls,” while officials study the employment impact and potential reskilling needs. However, a comprehensive policy response has yet to emerge. The hashtag “AI anxiety” has racked up millions of views on platforms like RedNote, where users draw parallels to 19th-century weavers displaced by power looms.
“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. Wide-scale AI adoption is needed to achieve industrial efficiency and accelerate innovation. The hope is a positive snowball effect on productivity and growth,” Selena Guo, social policy analyst at advisory firm China Policy, said.
Yet the speed of job displacement currently outpaces new AI-related job creation. While AI job postings surged 74% in 2025, the broader labor market remains challenging. Companies like Alibaba are reportedly reducing headcount in areas such as marketing and front-end development through attrition and targeted cuts rather than mass layoffs. An engineer in Alibaba’s cloud division said AI-driven reductions are unfolding gradually across parts of the company.
Long-Term Outlook
The push for AI comes as China’s economy shows signs of cooling after a strong first quarter. Growth slowed in April, with industrial production and retail sales posting some of their weakest readings in years. The official manufacturing PMI slipped to the contraction threshold of 50 in May.
Economists warn that without robust domestic consumption, the productivity gains from AI may not fully offset the social and economic costs of displacement. The government’s emphasis on “high-quality development” and technological self-reliance is clear, but translating that into a broad-based opportunity for workers remains a formidable challenge.
Currently, many Chinese companies appear to be prioritizing quiet efficiency gains over dramatic public restructurings. This approach may buy time, but it does not eliminate the underlying tension. As AI tools like OpenClaw and Wukong (Alibaba’s multi-agent platform) become more capable, with features like “one-person company” skills that can automate entire departments, the pressure on employment will only intensify.
Liu, the Hangzhou contractor, is already contemplating her options.
“AI penetrating every aspect of life is only a matter of time… I want to go back to farming, or become an artisan,” she said.
Her sentiment echoes a growing anxiety across China’s workforce.