Experts cited by Xinhua say AI can boost productivity, but workers should not bear the risks of technological iteration alone.

A Hangzhou court ruled that Chinese companies cannot dismiss employees solely to replace them with AI, asserting that AI-driven automation does not qualify as a major change in objective circumstances under China's Labour Contract Law.

The case centered on Zhou, a senior quality assurance supervisor whose role was absorbed by AI, leading to a 40% salary cut and demotion before termination; the court found the dismissal unlawful and ordered additional compensation.

The decision comes amid broader scrutiny in China over AI adoption and its impact on jobs, presented as part of a growing trend.

Industry and policy reactions are mixed: some praise workers’ rights protections, while others worry the ruling could constrain innovation.

The ruling underscores the need to balance innovation with worker protections as AI becomes more capable and integrated in the workplace.

Even when companies gain efficiency from AI, they retain social and legal responsibilities toward human workers, per the ruling.

Employers are encouraged to pursue reassignment, retraining, or proper compensation instead of dismissing workers solely to cut costs through automation.

Separately, the U.S. Department of Defense announced new AI deployment agreements with major tech firms to strengthen operational capabilities across classified networks, signaling an AI-first military posture.

Early cases suggest the judiciary is trying to balance efficiency gains with social stability, signaling limits on fully algorithmic replacement of human labor.

Beijing arbitration cases in 2025 noted AI adoption is a voluntary corporate choice to stay competitive, and the associated risks should not be imposed solely on employees.

Practically, AI can augment work but cannot alone justify staff cuts; any automation-driven restructuring must be justifiable as a business necessity and comply with labor protections.