Major Chinese internet companies have begun quietly firing contractors and reducing graduate hiring since March 2026, coinciding with executive mandates that employees learn to use AI agent tools including OpenClaw. Nine workers across tech, entertainment, and advertising described the pattern to Reuters, painting a picture of stealth workforce reduction designed to avoid government scrutiny.
Contractor Cuts Without Public Announcements
Liu, a 26-year-old Hangzhou-based contractor at a large Chinese internet firm, told Reuters her employer began quietly firing contractors in March after ordering staff to use AI tools. “The tasks most people do can be completely replaced by OpenClaw. After a person writes all their workflows into OpenClaw… they can basically be fired,” she said.
The approach is deliberate. Under Chinese labor laws, companies must seek government approval for job cuts exceeding 10% of their workforce. Chinese courts have ruled against companies in at least three cases involving workers dismissed to be replaced with AI, according to Reuters. A senior manager at a large Chinese fintech company told Reuters that private companies “will need to make room for some level of inefficiency in order to avoid mass layoffs that would prompt ‘social instability’ and could have political ramifications.”
Token Usage as Performance Metric
Some firms have moved beyond replacing roles with AI to measuring whether workers adopt it fast enough. A big data engineer at a Chinese tech giant told Reuters his manager began ranking employees by token usage in March, with the metric now linked to performance reviews and promotion prospects. “It is relatively forced. One should not use AI for the sake of it,” he said. “I still can’t shake the feeling that I’m getting closer to being replaced.”
An engineer at Alibaba’s cloud division also confirmed to Reuters that AI-driven headcount reductions have begun in parts of the company, likely to unfold through gradual cuts and attrition rather than mass layoffs. Alibaba did not respond to Reuters’ request for comment.
Entertainment Industry Hit Hardest
Entertainment has seen some of the steepest cuts. Ayase, a 22-year-old micro drama producer who was fired in February, told Reuters her production department shrank from 30-40 people to about 10 per group as studios shifted to AI-generated actors and sets. “With live-action, a single actor costs thousands of yuan per day, even for a minor role with just a few lines,” she said.
The Scale of the Risk
Citibank estimated in a recent report, cited by Reuters, that 9.6% of all Chinese jobs, roughly 70 million positions, are at high risk of AI-driven displacement. That risk rises to 13.6% for workers in their 20s. A record 12.7 million university graduates face a job market where AI-related postings surged 74% in 2025, but entry-level pay and total available positions declined.
Beijing’s “AI Plus” initiative targets 70% AI adoption across key sectors by 2027 and 90% by 2030. Alibaba’s Wukong multi-agent platform already markets pre-set “one-person company” skills designed to automate entire job categories including e-commerce, livestreaming, and software development.
The Contradiction at the Center
Beijing faces a tension that no other government has yet resolved at this scale: it wants AI adoption fast enough to transform productivity, but not so fast or visibly that workers are pushed out in numbers that threaten social stability.
“AI sits at the centre of China’s transition in a particular way: it is simultaneously a driver of the disruption and the proposed solution to it,” Selena Guo, social policy analyst at advisory firm China Policy, told Reuters. The hashtag “AI anxiety” has gained over 7.8 million views on Chinese social media app RedNote, where users debate whether AI will make them obsolete.
Chinese state media has attempted to reassure workers that AI is not “stealing people’s rice bowls.” Officials are currently studying AI’s impact on employment and developing reskilling plans, but no detailed policy response has been issued.
For agent platform operators and enterprise AI vendors, the Reuters investigation makes one thing clear: the labor displacement that Western adoption narratives frame as hypothetical is already happening in China’s tech, entertainment, and advertising sectors. The question is whether it stays quiet.