China hopes AI deployment will boost productivity

China’s scramble to adopt artificial intelligence will spawn new jobs and propel the world’s second largest economy, say policymakers and company executives, as they play down growing global fears that the technology could stunt employment, Reuters reported.

Plans unveiled at the opening of parliament’s annual session last week go all-in on AI, detailing ambitions to offset an ageing workforce and long-term economic slowdown through the technology’s “job-creation” effect over the next five years.

“For now, advancing AI adoption and capability appears to be a higher policy priority than pre-emptively addressing potential job displacement,” said Shujing He, senior analyst at consultancy Plenum.

The emphasis on the positive and job-creating potential of AI leaves policymakers room to respond if more disruptive labour market effects become evident, however, she added.

The remarks follow Saturday’s comments by Human Resources Minister Wang Xiaoping that China was working to “actively leverage” AI in creating jobs and expanding employment opportunities for 12.7 million university graduates this year.

The International Monetary Fund (IMF) predicts that AI will affect nearly 40% of global jobs, rising to 60% in advanced economies, while Stanford University researchers found it is beginning to exert a “significant and disproportionate” impact on US labour market entrants. But some analysts were sceptical of Beijing’s optimism and said the government would probably need to do more.

“Automation has two major impacts: wages are being pushed down, and ... youth unemployment will continue to go up,” said Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis.

“If China does not introduce any kind of universal basic income ... there is no way the Chinese population can cope with this shock.”

In a broadcast by state-run CCTV during the parliament sessions, two executives at Chinese state-owned enterprises, famed for providing job security equivalent to having an “iron rice bowl”, said they anticipated AI would unleash huge restructuring efforts at their organisations.

But one of them, Changan Automobile chairman Zhu Huarong, said he was optimistic that China’s AI deployment push would transform the automobile industry into a “sunrise industry” from a fading one.

Chinese universities are already reworking their courses to adapt, academics told Reuters on the sidelines of the sessions.

ShanghaiTech University introduced AI “micro-majors” for students to impart skills AI cannot easily replace, such as cross-disciplinary learning, critical thinking and creativity, said its provost, Yin Jie.

“We must train them to ask questions,” the academic added. “If your thinking isn’t sharp, you won’t beat the robots.”

China is focusing on reskilling programmes and talent development to adapt to shifting industry dynamics, said Wei Sun, principal AI analyst at Counterpoint Research, rather than framing AI and labour as a “zero-sum” trade-off. China’s push is driven by hopes that AI could bring gains in productivity to offset its long-term economic slowdown and ageing workforce. About 300 million people are set to retire in the next decade, straining pension budgets.

Last week China set itself the lowest target for GDP growth since the 1990s, at 4.5% to 5%, while youth unemployment remains persistently high.

With its new five-year plan calling for AI to be spread into sectors beyond manufacturing, such as services, Beijing is already developing industry-specific AI models and deployment plans for future rollout.

Still, some Chinese academics have voiced concerns over job displacement.

“Job destruction often precedes and outweighs job creation,” prominent labour economist Cai Fang wrote in a recent book.

“Although technological progress will ultimately create new jobs, the high penetration and automation trends of AI may lead to long-term employment shocks,” he added. He called for more investment in human capital and social welfare protections in response. Dismissing employees solely to replace them with AI is illegal, a Beijing court said in a landmark labour arbitration ruling last year.