Chinese Firms Use Quiet Layoffs to Integrate AI Tools

Chinese enterprises are implementing a strategy of quiet, small-scale layoffs and reduced graduate hiring to integrate artificial intelligence tools, such as the OpenClaw agent, into their operations. This approach allows firms to transition their workforces without triggering government scrutiny or social instability, as Chinese labor laws require state approval for job cuts exceeding 10 percent of a company's workforce.

Alibaba Group is among the firms preferring gradual attrition over mass layoffs, utilizing its Wukong multi-agent platform to automate entire departments. In some tech and entertainment sectors, companies have begun ranking employees by token usage to measure their adoption of AI. These shifts align with the AI Plus initiative launched by the Government of China, which aims for 70 percent AI adoption in key sectors by 2027 and 90 percent by 2030.

The transition comes amid a challenging labor market for the record 12.7 million university graduates entering the workforce. While AI-related job postings increased by 74 percent in 2025, Citigroup estimates that approximately 70 million Chinese jobs are at high risk of displacement. The Ministry of Human Resources and Social Security is currently studying the impact of AI on employment as the state attempts to balance productivity gains with social stability.