Why AI adoption in China has not yet led to widespread job cuts

Beyond government guidance, lower labor costs in China are also helping domestic firms avoid aggressive layoffs as they adopt artificial intelligence (AI), unlike some U.S. peers in the same sector.

The U.S. tech giant Oracle has announced large-scale layoffs, renewing concerns about AI’s impact on jobs in the U.S. tech industry. In China, analysts say the effect appears more limited for now, citing differences in labor-market management, wage costs, and corporate structures.

Cause: Different labor targets and lower wage pressure

Analysts point to management-system differences. Unlike the U.S., Beijing sets employment targets at the national level, with urban unemployment around 5.5%.

“Beyond government direction, lower labor costs in China also mean domestic firms do not have to cut staff as aggressively as American peers,” said Alex Lu, founder of LSY Consulting, in an interview with CNBC.

Development: Pay levels for AI-related roles and talent competition

Data released last month by online recruitment platform Zhilian put the average monthly salary for an algorithm engineer in China at 20,035 yuan (about $2,900).

While this is seen as an attractive starting salary in China, the annual income is about $35,000 when converted to USD—nearly ten times lower than salaries in Silicon Valley, despite higher taxes and living costs in the U.S.

An HR manager at a Silicon Valley startup, who previously worked at Baidu and TikTok, said a mid-level software engineer earning about $300,000 per year in the U.S. may have to accept more than half of that if they move to China.

“Two markets are competing to attract the same pool of talent,” the manager noted.

Data and context: U.S. layoffs can also affect visas

For Chinese workers in the U.S., sudden layoffs can affect not only employment but also residency status. Many engineers are choosing to return to China because it is difficult to find new work quickly enough to meet visa requirements.

Returning home can still be challenging. For those used to long-tenured roles at U.S. companies, the high intensity and highly competitive environment in China can be a shock.

Impact: Work culture and broader job scopes reduce AI replaceability

After the Covid-19 pandemic, remote work expanded in the U.S., while most Chinese firms still prefer employees to work in the office as much as possible. Analysts link this to management culture, where many Chinese business leaders value direct supervision of large teams.

Tina Zhou, founder of Boomfluence.ai, said engineers in Chinese firms typically handle a broader scope than those in comparable roles at U.S. tech giants, making it harder for AI to replace them entirely.

“Many Chinese firms maintain larger headcounts in marketing and customer service, rather than focusing solely on the technical team,” Zhou said. Zhou is based in Beijing and visits San Francisco about once per quarter.

Analysis: AI-related restructuring still occurs among major Chinese firms

These differences do not mean Chinese companies are immune to AI-related layoffs. Alibaba reported a more-than-30% reduction in headcount, saying the declines reflect changes in business operations aimed at prioritizing an AI strategy.

In contrast, Tencent reported a modest rise in total staff last year. Huawei continues to maintain a large R&D workforce, with about 114,000 people as of December 2025, up from 113,000 a year earlier.

This pattern suggests China’s leading tech firms continue to invest in technology and innovation.

Additional factor: Lower digitization and enterprise tooling adoption

Lu of LSY Consulting said China’s organizational structure and digitization levels also limit AI’s employment impact. He noted that digitization among Chinese firms remains generally lower than in the U.S., where enterprise software has been more widely deployed.

Lu added that while OpenClaw has recently gained popularity in China, it is currently mainly for individuals rather than an enterprise solution.

Broader policy and social considerations

AI remains a hot topic among Chinese parents amid growing concerns about schooling and career prospects for their children.

Politically, Beijing is trying to balance growth and innovation. In recent years, youth unemployment in China has remained in the double digits, while urban unemployment in cities sits around 5%.

At a Tuesday event (Apr 7), Huang Yiping, an advisor to the Chinese Central Bank (PBOC), said China must develop high-end technologies to sustain growth, but AI-related innovations must prioritize human needs.