Chinese companies are carrying out small, dispersed layoffs as they rush to adopt artificial intelligence, aiming to boost productivity without triggering government scrutiny or social unrest, according to a recent Reuters report.
A contractor at a large Chinese internet firm, identified only as Liu, told Reuters her employer began quietly dismissing contractors in March after ordering staff to use AI tools including the agent OpenClaw. “The tasks most people do can be completely replaced by OpenClaw. After a person writes all their workflows into OpenClaw, they can basically be fired,” the 26-year-old said.
Her employer has also begun reducing graduate recruitment, mirroring a pattern reported by nine workers across industries including tech, entertainment, and advertising. A senior manager at a large Chinese fintech company told Reuters that restructuring is already underway at every major tech firm, with marketing and front-end roles largely replaced by 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,” the manager said.
An engineer at Alibaba’s cloud division also confirmed that AI-driven headcount reductions have begun and are expected to take place through gradual cuts and attrition rather than a single mass event. Alibaba did not respond to Reuters’ request for comment.
Chinese labour laws require government approval for job cuts exceeding 10% of a workforce, and courts have ruled against companies that dismissed workers to replace them with AI, states the report. Yet, Beijing’s ‘AI Plus’ initiative targets 70% AI adoption across key sectors by 2027 and 90% by 2030, creating a tightrope for firms, as per Reuters.
Some employers are now tracking how much AI staff use. A big data engineer at a Chinese tech giant told Reuters that his manager began ranking employees by token consumption in March, tying the metric to performance reviews and promotions. “I still can’t shake the feeling that I’m getting closer to being replaced,” he said.
The entertainment sector is already seeing sharp contractions. Ayase, a 22-year-old micro drama producer who was fired in February, said her production department shrank from 30 to 40 people down to about 10, 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,” she said.
As per the report, Citibank estimates that 9.6% of all Chinese jobs, roughly 70 million, are at high risk of AI-driven displacement, rising to 13.6% for workers in their 20s. A record 12.7 million university graduates are entering the workforce this year, facing declining entry-level pay and fewer opportunities.
Alibaba’s multi-agent platform Wukong already markets pre-set skills designed to automate entire departments, including e-commerce sales, livestreaming, and software development. The hashtag “AI anxiety” has drawn over 7.8 million views on RedNote. “Those who don’t use AI will be eliminated,” Liu said. “AI penetrating every aspect of life is only a matter of time.”