SEOUL, South Korea — When a Chinese court ruled late last month that a technology company had illegally fired an employee after replacing him with artificial intelligence software, it sent an implicit warning to other employers.
“The development of artificial intelligence technology should be applied to liberate human labor, promote employment and improve the living conditions of the people,” the Hangzhou Intermediate Court wrote. “Labor legislation allows employers to make technological changes and modernize their operations, but this must also take into account the protection of workers’ legitimate rights and interests.”
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The case — the third time that the Chinese government has highlighted a decision in favor of workers replaced by AI — shows how Beijing is trying to balance its ambition to expand the use of artificial intelligence with the unemployment that can accompany this process.
China has invested billions to become an AI superpower and has accelerated the integration of the technology across a wide range of sectors. But these aspirations have come up against a growing political problem: anxiety about the workers who could be replaced by the implementation of Beijing’s technological project.
“The deeper tension is between this all-out effort to spread AI across the economy and the desire for it not to affect any jobs,” said Matt Sheehan, a senior fellow at the Carnegie Endowment for International Peace.
Governments around the world are trying to understand how AI will transform job markets. Officials in Japan, the United Kingdom and South Korea have discussed versions of a universal basic income for workers displaced by technology.
In China, the debate has become especially intense amid a weak economy and persistently high youth unemployment — around 17% — which has fueled disenchantment with the possibilities of upward mobility. More than 200 million workers have already been thrust into demanding, low-paying jobs in the app economy.
In this broader context of economic insecurity, fears about AI replacing workers have intensified, especially after a self-driving taxi in Wuhan ran over a pedestrian, Sheehan said.
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“Despite being an authoritarian country, the Chinese government pays close attention to what people are thinking, feeling and saying on the internet and feels it needs to respond,” he said.
The set of three court decisions offered a preview of how this response might play out.
In each case, courts have held that employers remain responsible for keeping workers on the payroll, even if AI has made their positions redundant.
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Judges have repeatedly ruled that replacing workers with AI is a voluntary cost-cutting measure and does not justify mass layoffs.
Chinese authorities appear committed to making workers and employers understand the message.
Hangzhou’s decision in favor of the technology company employee replaced by AI received a special classification indicating that it should serve as a model for future cases.
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In this case, an employee identified in the records only by the pseudonym Zhou had worked as a quality control supervisor at an AI company until he was replaced by technology.
When the company offered him a new position that would reduce his salary from 25,000 to 15,000 renminbi per month, he refused and was fired. The court found that his employer had not sought to accommodate him appropriately.
Jiang Xiaotong, a lawyer who represented Zhou, said that he “not only suffered a hit to his income, but also faced severe career anxiety, leaving him feeling deep concern about his future career prospects.”
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Zhou is “middle-aged and faces significant family and financial pressures,” she said. He is one of the mid-career professionals in China trying to navigate a difficult job market that values youth.
Jiang said the court’s decision to classify the case as a reference for other courts was significant.
“Now that a potentially precedent-setting case has been established, people are much more willing to resort to the weapon of law to defend their legitimate rights and interests,” she said.
In a similar case in Beijing, an arbitration panel ruled in favor of a cartographic data collector whose entire department was fired and replaced by AI.
The panel concluded that the company’s adoption of AI was a voluntary choice to maintain competitiveness and did not justify the employee’s dismissal.
Companies that benefit from technology must simultaneously assume “social responsibilities” and protect workers’ rights, the panel ruled.
Government rhetoric surrounding AI implementation initially emphasized the technology’s benefits for workers. More recently, however, official statements and state press commentary have begun to recognize AI as a potentially corrosive force for the job market.
“The government was really pushing this spread agenda,” said Ruby Scanlon, a researcher at the Center for a New American Security. “Increasingly, speeches, incentives and public policy documents have emerged aimed at creating some type of protection for workers.”
In China, robots and AI have already played a disruptive role in two of the country’s biggest job categories: manufacturing and food delivery.
More than 2 million robots were already working in Chinese factories in 2024. And in Beijing, Shanghai and Shenzhen, Meituan, the country’s largest food delivery service, has been testing small autonomous robots to make deliveries.
In Shanghai, Meituan delivers more than a thousand meals a day using these robots, according to promotional materials published by Nvidia.
With these changes in mind, China’s Ministry of Human Resources and Social Security announced in January that it would implement policies to address “the impact of artificial intelligence on jobs,” including “targeted support for employment in strategic sectors.”
Some party members have proposed government intervention, such as encouraging employers to offer job training to help workers adapt to an AI-centric job market.
Liu Qingfeng, founder of a technology company and member of the National People’s Congress, advocated a government-led “AI unemployment insurance program” to create a safety net for displaced workers.
For now, however, the focus appears to continue to be on encouraging companies themselves to postpone layoffs.
“Truly visionary companies will take advantage of the technological advantages of AI to explore new paths and create new jobs, transforming technology into a driver of corporate development,” said a commentary published in March by state agency Xinhua.
“Companies that equate AI with ‘downsizing’ may appear to reduce costs in the short term, but in practice they lose the core competitiveness built by talent accumulation and further erode employee trust.”
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