The rapid integration of artificial intelligence across China’s corporate landscape is beginning to manifest in a tangible and controversial workforce trend: “quiet” layoffs. As companies adopt advanced AI agents and automation tools to boost productivity, they are simultaneously navigating strict national labor regulations by executing gradual, unannounced headcount reductions. This phenomenon, detailed in a recent Reuters report, highlights the complex socioeconomic friction emerging as China aggressively pursues its “AI Plus” national strategy.
The tension between technological advancement and employment stability is becoming increasingly acute. While the government champions AI as a critical driver of future economic growth, the immediate reality for many workers involves heightened job insecurity, shifting performance metrics, and the looming threat of obsolescence.
The Mechanics of the “Quiet” Layoff
The strategy of quiet layoffs is largely a response to China’s stringent labor laws, which require companies to obtain formal government approval for job cuts exceeding 10 percent of their total workforce. To avoid regulatory scrutiny and the potential for social unrest, corporations are opting for a more insidious downsizing approach.
According to interviews conducted by Reuters with workers across the technology, entertainment, and advertising sectors, the process often begins with a mandate to integrate AI tools into daily workflows. Employees are instructed to train AI agents on their specific tasks and processes. Once the AI system demonstrates proficiency, the human worker’s role is subsequently eliminated or marginalized.
“Liu,” a 26-year-old contractor at a major Hangzhou-based internet firm, described this exact scenario. She reported that her employer began quietly dismissing contractors in March after requiring staff to utilize AI tools, including an AI agent named OpenClaw. “The tasks most people do can be completely replaced by OpenClaw,” Liu explained. “After a person writes all their workflows (into OpenClaw)… they can basically be fired.”
This sentiment is echoed across various industries. “Ayase,” a 22-year-old micro-drama producer, was dismissed in February after her production department was reduced from 30 to 40 people to approximately 10 following a transition to AI-driven workflows.
Corporate Caution and Legal Precedents
While the productivity gains offered by AI are undeniable, large private companies are proceeding with caution. A senior manager at a prominent Chinese fintech company noted that firms “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 is reinforced by recent legal precedents. Chinese courts have ruled against companies in at least three separate cases where workers were dismissed specifically to be replaced by artificial intelligence. Consequently, companies are relying on gradual cuts, natural attrition, and performance-based dismissals rather than sweeping, publicized layoffs.
An engineer at Alibaba’s cloud division confirmed that AI-driven headcount reductions have already commenced, but emphasized that they are likely to unfold slowly. He Shujing, a senior analyst at the consultancy Plenum, observed, “The productivity gains from AI will likely reduce hiring needs, but large companies are expected to be cautious about making direct workforce cuts.”
The Scale of the Threat: 70 Million Jobs at Risk
The anecdotal evidence of quiet layoffs is supported by stark macroeconomic projections. A recent estimate by Citibank suggests that 9.6 percent of all Chinese jobs, equating to roughly 70 million positions, are at high risk of AI-driven displacement. This risk is even more pronounced for younger demographics, rising to 13.6 percent for workers in their twenties.
This demographic vulnerability is particularly concerning given the current state of the Chinese labor market. A record 12.7 million university graduates are entering the workforce this year, facing a landscape characterized by declining entry-level salaries and intense competition. While AI-related job postings surged by 74 percent in 2025, these specialized roles do not absorb the vast numbers of graduates seeking traditional employment.
The anxiety surrounding AI displacement is palpable on Chinese social media. The hashtag “AI anxiety” recently garnered over 7.8 million views on the popular platform RedNote, reflecting widespread apprehension among the working public.
New Metrics and the “One-Person Company”
The integration of AI is not only eliminating jobs but also fundamentally altering how remaining employees are evaluated. A big data engineer at a Chinese tech giant reported that management began ranking employees based on their AI token usage in March, directly linking this metric to performance reviews. This creates a high-pressure environment where employees must constantly demonstrate their ability to leverage AI tools to remain relevant.
Furthermore, the technology itself is evolving to facilitate leaner organizational structures. For example, Alibaba’s Wukong multi-agent enterprise platform now features pre-set “one-person company” skills, explicitly designed to allow a single individual to manage operations that previously required a team.
Selena Guo, a social policy analyst at China Policy, summarized the paradox at the heart of this transition: “AI sits at the centre of China’s (economic) transition in a particular way: it is simultaneously a driver of the disruption and the proposed solution to it.”
As Beijing pushes forward with its ambitious “AI Plus” initiative, which targets 70 percent AI adoption across key sectors by 2027 and 90 percent by 2030, the tension between technological efficiency and social stability will only intensify. For the Chinese workforce, the message is increasingly clear, as articulated by the contractor Liu: “Those who don’t use AI will be eliminated.”