SEOUL: When a Chinese court ruled late last month that a tech company had illegally laid off a worker after replacing him with artificial intelligence software, it delivered an implicit warning to other employers.
“The development of artificial intelligence technology should be applied to liberating labour, promoting employment and improving people’s livelihood,” the Hangzhou Intermediate People’s Court wrote. “Labour law allows employers to undertake technological changes and upgrade their operations, but it should also take into account the protection of workers’ legitimate rights and interests.”
The case – the third time the Chinese government has highlighted a ruling siding with workers displaced by AI – underscores how Beijing is contending with the need to balance its ambitions for the widespread use of AI with the unemployment that might accompany it.
China has invested billions to become an AI superpower and raced to integrate the technology across a broad range of industries. But those aspirations have run headlong into a growing political problem: anxiety over the workers who could be displaced by the realisation of Beijing’s technological drive.
“The deeper tension is between this all-out push for AI diffusion into the economy and wanting that to not actually impact any jobs,” said Matt Sheehan, a senior fellow at the Carnegie Endowment for International Peace.
Governments around the world are wrestling with how AI will disrupt labour markets. Officials in Japan, the United Kingdom and South Korea have floated versions of a universal basic income for workers who have been replaced by technology.
In China, the debate has become especially acute amid a sluggish economy and persistently high youth unemployment – about 17% – that has fueled disillusionment about opportunities for upward mobility. More than 200 million workers have already been pushed into low-paying, demanding jobs in the gig economy.
Against that broader backdrop of economic anxiety, fears about AI technology replacing workers have intensified, especially after a robotaxi in Wuhan struck a pedestrian, Sheehan said.
“Despite being an authoritarian country, the Chinese government is actually very attentive to what people are thinking and feeling and saying on the internet, and they feel like they need to respond,” he said.
The trio of court rulings has offered an early glimpse of what that response might look like. In each case, the courts said employers remained responsible for keeping workers on the payroll, even if AI had rendered their jobs redundant. Judges have repeatedly ruled that replacing workers with AI is voluntary cost-cutting that does not justify mass layoffs.
Chinese policymakers appear eager for workers and employers to get the message. The Hangzhou ruling in favour of the tech worker replaced by AI was given a special designation signalling that it should serve as a model for future cases.
In that case, an employee identified in filings only by the pseudonym Zhou had worked as a quality assurance supervisor at an AI company until the technology replaced him. When the company offered him a new role that would cut his salary to 15,000 renminbi (RM8,750.40) per month from 25,000 renminbi (RM14,584), he refused and was fired. The court ruled his employer had failed to properly accommodate him.
Jiang Xiaotong, the lawyer who represented Zhou, said he “not only suffered a blow to their income but also experienced acute professional anxiety, becoming deeply apprehensive about their future career prospects.”
Zhou is “middle-aged and faces significant family and financial pressures,” she said. He is one of the midcareer professionals in China struggling to weather a difficult job market that prizes youth.
Jiang said the court’s decision to designate the ruling as one that other courts can follow was significant.
“Now that a precedent-setting case has been established, people are far more willing to take up the weapon of the law to defend their legitimate rights and interests,” she said.
In a similar case in Beijing, an arbitration panel ruled in favour of a map data collector whose entire department was laid off and replaced with AI. The panel found that the company’s adoption of AI was a voluntary move to remain competitive and did not warrant the employee’s firing.
Companies that benefit from technology must, at the same time, adopt “social responsibilities” and protect worker rights, the panel ruled.
Government rhetoric around the deployment of AI initially stressed the technology’s benefits to workers. Recently, however, official statements and commentaries by state news outlets have begun to acknowledge AI as a potentially corrosive force in the job market.
“The government was really pushing this diffusion agenda,” said Ruby Scanlon, a research associate at the Center for a New American Security. “Increasingly, there’s been a lot more rhetoric and nudges and policy documents to the idea of actually creating a backstop for employees.”
A handful of party officials have proposed government intervention, such as encouraging employers to offer vocational training to help workers adapt to an AI-centric job market. Liu Qingfeng, a tech firm founder and member of the National People’s Congress, has called for a government-led “AI-unemployment insurance program” to create a safety net for displaced workers.
For now, though, the focus appears to remain on encouraging companies themselves to hold off on layoffs.
“Truly visionary companies will leverage the technological advantages of AI to explore new avenues and create new jobs, making technology a driving force for corporate development,” a commentary in March from Xinhua, the state news agency, opined. “Those companies that equate AI with ‘reducing staff’ may seem to lower costs in the short term, but in reality, they lose the core competitiveness of talent accumulation and further erode employee trust.” – ©2026 The New York Times Company
This article originally appeared in The New York Times.
