China's AI Race Runs Headlong Into a Fragile Job Market

With youth joblessness high and layoffs looming, Beijing has to balance its AI ambitions and shielding workers.

- Tan Dawn Wei

You know you've made it when there are scalpers peddling tickets at prices nearly three times over, which was what happened at the recent World AI Conference in Shanghai.

The enthusiasm and scale of the late-July event was unprecedented, with more than 800 Chinese and international exhibitors showcasing a record 3,000 exhibits including large language models, AI-powered devices and intelligent robots.

It is testament to the exuberance that has captured China since DeepSeek came out of almost nowhere earlier this year and stunned the world with its highly efficient, cost-effective artificial intelligence (AI) model. Industries rushed to get on board, adopting the open-sourced DeepSeek into their workflow, while others began developing their own models.

But the AI fever is also threatening to worsen an already weak job market plagued by retrenchments and salary cuts, and one that has struggled with a persistently high youth jobless rate in recent years.

Compounding that – with Beijing now signalling that it is cracking down on "involuted competition" in overheated sectors from electric vehicles to solar panels to e-commerce – there are jitters over possible factory closures and consolidation in industries with overcapacity that will almost surely lead to mass layoffs.

How policymakers will manage the transition, and not let enthusiasm for AI outrun hard-headed planning for the people it will affect, will be key to answering the question of just how much social and economic costs China's tech leadership ambitions will exact.

CHINA'S AI PUSH China has a long-running industrial plan to cultivate AI as a pillar of growth and national security, and recent policy and funding flows have intensified that trajectory.

In 2017, it launched a road map to make AI a core driver of its economic transformation by 2025 and to become a global innovation centre by 2030.