China eyes AI dominance with massive data advantage, risking mass layoffs at home and fueling a high-stakes global showdown.
News Analysis
China’s aggressive leap into artificial intelligence (AI) may secure its global leadership—or sink its economy, experts say.
Powered by a vast data trove, hefty state funding, and a national goal to lead the world in AI by 2030, the country aims to push ahead. Meanwhile, Beijing’s ambition threatens millions of jobs domestically, heightens tensions with the United States, and sparks ethical concerns over how this technology is being built and used.
Beijing has introduced a state-backed fund expected to bring in $138 billion from local governments and private sectors for AI projects over the next 20 years. The Chinese Communist Party (CCP) also added the “AI Capacity-Building Action Plan” to its 2024 agenda, aiming to integrate AI into manufacturing, health care, and public services.
Market consultancy McKinsey & Company estimated that China will need a workforce of 6 million AI professionals by 2030 to meet its rapidly growing demand, six times its 2023 level.
As of June 2024, according to data from China’s Ministry of Industry and Information Technology, there were more than 4,500 AI-related companies and 9.4 million software developers, driving a market worth 600 billion yuan ($82.6 billion).
Between 2014 and 2023, China filed more than 38,000 generative AI patents compared to 6,276 filed by the United States in the same period, according to data published by the World Intellectual Property Organization (WIPO).
Tech giants like Alibaba, Tencent, and ByteDance lead the charge, but the state’s heavy hand sets the pace. On Feb. 20, Premier Li Qiang pushed for faster AI product rollouts, while academic Gao Wen, a prominent voice, touted high-quality AI as China’s ticket to global leadership.
Jobs on the Line
This AI boom, however, could come at a human cost.
Cybersecurity expert Zeng Yishuo warns of “structural unemployment”—a mismatch between available jobs and workers’ skills as machines and computers take over.
Zeng, a researcher at Taiwan’s Institute for National Defense and Security Research, recently told The Epoch Times that such a problem could be detrimental to China, as its vast population amplifies the impact of any unemployment spike. A small percentage impacted could mean millions out of work.
When large groups remain unemployed, consumer spending falls, and growth slows, creating a vicious cycle that continues to reduce investment and lower demand for new workers, he added.
China’s youth unemployment hit a record high of 21.3 percent in June 2023, prompting the National Bureau of Statistics to halt reporting. When Beijing began publishing youth jobless data again in January 2024, officials introduced a new calculation method excluding groups like students, bringing December 2023’s official rate down to 14.9 percent. By August 2024, it had climbed again to 18.8 percent.
Meanwhile, overall urban unemployment stayed slightly above 5 percent throughout 2024 and is projected by Beijing to reach 5.5 percent in 2025.
In Shenzhen, more than 70 AI robots already handle hundreds of government services like tax filings and license renewals, according to state media. As of February, nearly 100 hospitals across China had adopted AI models to assist with tasks like decision-making, medical imaging analysis, and medical record quality control.
Hospitals in Guangdong have rolled out AI-assisted medical consultations, local authorities said.
The private sector isn’t immune. A leaked memo from Chicmax Cosmetics, a major Chinese cosmetics brand, revealed plans to slash staff in some departments, such as customer service and legal, by up to 95 percent, with only those proficient in AI staying.
Though CEO Lu Yixiong later denied mass layoff plans and said headcount would grow, the fear is real.
A study published in July 2023 in Finance Research Letters estimates that AI could replace up to 54 percent of jobs in China over the coming decades, affecting hundreds of millions of workers. The study also highlights production and transport equipment operators as being among the most vulnerable to automation.
Meanwhile, in 2024, prominent Chinese economist Peng Wensheng predicted a 0.8-point GDP boost over a decade due to AI but cautions that income inequality could widen as low-skill workers bear the brunt.
Zeng said displaced workers face a bleak future in a country where their skill sets become obsolete without proper retraining.
Research indicates a skills mismatch in China’s workforce as automation and AI widen gaps in advanced manufacturing. A recent report by Deloitte and Chinese firm Renrui Human Resources Technology warns the workforce is unprepared for CCP leader Xi Jinping’s high-tech push, projecting a shortage of 5.5 million smart manufacturing workers by 2025.
Yet there’s a flip side. PricewaterhouseCoopers suggests that if China plays its cards right—boosting productivity, real income, and spending levels—AI could yield a net 12 percent employment gain over the next two decades. The question is whether that transition of China’s labor force can happen in tandem.
US–China Tech Rivalry
Many governments have identified AI as a key indicator of future national power. AI is also a flagship investment area for U.S. President Donald Trump.
According to Statista, China has an estimated 26 percent share of global data creation in 2023. Meanwhile, the country’s minimal ethical constraints fuel rapid experimentation, allowing apps like DeepSeek to hoover up user info—emails, keystrokes, and more—and store them on servers accessible to authorities under Chinese law.
The United States, meanwhile, takes a different approach. Private giants like Google, Microsoft, and OpenAI drive progress, with the government supporting it. Trump revoked President Joe Biden’s executive order to loosen AI regulation shortly after taking office in January, implementing more safety and legal guardrails.
In response to China’s rising AI influence, Washington has steadily expanded export controls on advanced AI chips and tightened licensing requirements for high-end computing equipment export.
Akio Yaita, director of Indo-Pacific Strategy Think Tank, told The Epoch Times that the CCP’s authoritarian grip stifles true innovation, while its controversial data practices have triggered a global backlash, leading to bans on Chinese apps such as Deepseek in numerous countries.
Lin Zongnan, an engineering professor at Taiwan National University, told The Epoch Times that DeepSeek could emerge as “the Huawei of AI,” a state-backed giant masquerading as a private entity, sparking security concerns. Originally founded as a private company, DeepSeek has increasingly drawn substantial state support and nationalist sentiment, fueling doubts about its independence.
Chinese counterespionage laws mandate that domestic companies hand over user data on demand, fueling international scrutiny.
Independent journalist Zhuge Mingyang calls China’s AI push an “AI Great Leap Forward”—bold but perilous, risking chaos as traditional industries already battered by e-commerce and unemployment swell. He references former Chinese leader Mao Zedong’s original Great Leap Forward campaign, an ambitious plan to rapidly industrialize China that ultimately caused severe famine, devastation, and tens of millions of deaths.
China’s AI gamble could cement the country as a tech superpower, possibly outpacing rivals and reaping economic rewards. However, experts say the downsides—widespread job losses, deeper income inequality, and a simmering U.S. rivalry—loom large.
Xin Ning contributed to this report.