A quality assurance supervisor named Zhou was earning about $3,640 a month at a Chinese fintech company. His job was matching user queries with AI language models and filtering out bad content. When the company's AI tools got good enough to handle most of his work, they offered to demote him and cut his pay by 40%. He refused. They fired him.
He sued, and the court sided with him.
Zhou's case is one of at least three where Chinese courts have blocked companies from firing workers specifically because AI replaced their roles. Under Chinese labor law, mass layoffs—cutting 20 or more workers, or 10% of the workforce—require notification to labor authorities and must meet statutory grounds, and judges are increasingly unwilling to let "the AI can do it now" serve as legal grounds for termination.
At the same time, Beijing is pushing companies to adopt AI as fast as possible. The State Council's "AI Plus" initiative targets 70% adoption across key sectors by 2027 and 90% by 2030. So companies are caught between a government that wants them to automate everything and courts that say they can't let go of the people automation replaces.
They've found a way around it. A Reuters investigation talked to nine workers across tech, entertainment and advertising whose employers are running small-scale layoffs designed to stay under the legal radar. Contract lapses. Restructured job titles. Gradual attrition that never triggers the mass-layoff threshold.
A senior manager at a large Chinese fintech company said the strategy is deliberate: companies "will need to make room for some level of inefficiency" to avoid mass layoffs that "could have political ramifications." But the same person acknowledged that restructuring is already happening at every big tech firm in the country, with marketing and front-end jobs largely replaced by AI.
An engineer at Alibaba's cloud division confirmed the pattern, telling Reuters that AI-driven headcount reductions are unfolding through gradual cuts and attrition rather than a single mass round of layoffs. Roles get restructured, the AI specialists get hired, and nobody ever has to say the cuts were because of AI. The legal exposure disappears.
In entertainment, the math has been more blunt. Ayase, a 22-year-old micro drama producer, told Reuters her production department went from 30 to 40 people down to about 10 after her studio switched to AI-generated actors and sets. Only two stayed on for live-action filming.
And then there are the companies that haven't cut anyone yet but are measuring who's next. One big data engineer at a Chinese tech giant told Reuters his manager started ranking employees by how many AI tokens they consume each month, basically tracking how much each person uses AI tools in their daily work, and that the score is now tied to promotions.
"I still can't shake the feeling that I'm getting closer to being replaced," he said.
The data supports that anxiety. Citibank estimates that 9.6% of all Chinese jobs, roughly 70 million, are at high risk of AI displacement. For workers in their 20s, that number climbs to 13.6%. AI-related job postings surged 74% in 2025, but a record 12.7 million university graduates are entering a market with fewer openings and declining entry-level pay.
The hashtag "AI anxiety" has pulled in over 7.8 million views on RedNote, China's version of Instagram. Liu, a 26-year-old contractor whose employer started quietly firing contractors in March after ordering everyone to use OpenClaw, put the mood simply: "Those who don't use AI will be eliminated."
Every company that just rolled out AI tools across a department is staring at the same math Zhou's employer was staring at. The 40% pay cut, the restructured role, the contract that quietly doesn't get renewed: those moves aren't unique to China. The only thing unique to China is that courts forced the pattern into the open. In the US and Europe, there's no legal framework that singles out AI as a specific prohibited reason for dismissal, which means the same displacement plays out with less friction and less visibility. China is accidentally authoring the global AI layoff playbook. The rest of the world is already running it with fewer guardrails.
