Chinese technology workers are insecure because of AI

At the end of May, a series of rumors posted on Chinese social networks, including screenshots of group chats from "insiders", showed that food delivery company Meituan was preparing to have a major personnel purge, planning to halve the number of positions in the product segment by the end of June. Many employees were confused, not knowing when it was their turn to receive bad news.

Meituan then denied it. However, according to SCMP, the rumors are touching a sensitive point in the Chinese technology industry. Many employees whispered that a silent, unpublicized but more dangerous form of layoffs had actually been going on for months.

In recent years, workers in China's technology sector have been worried about the term "youhua", or "optimization", which refers to painful layoffs but is covered up with euphemisms such as "organizational restructuring". This year, the term takes on a new nuance, as the question is no longer whether an employee is working effectively or not, but whether their job can be replaced by AI.

Some large technology companies in China such as Baidu, Xiaomi... have all cut staff in different ways, but most have deployed AI agents in operations, according to China Daily. Instead of just playing a conversational and data retrieval role like a basic chatbot, agents can now do many things, from writing code, conducting market research, analyzing legal documents to performing multi-step business tasks.

This trend was stated by Anthropic CEO Dario Amodei last year, that AI agents will develop rapidly, possibly eliminating half of low-level office jobs within 5 years. Last month, the company said more than 80% of the source code integrated into its code repository was written by Claude.

Programmers are affected first

Programmers are respected for possessing the skill set used to write most sophisticated software. But now, they are being impacted by the wave of automation, as businesses realize programming work is being excelled by AI models.

"I've hardly written any manual code for almost a year now," Tuxi, a programmer working for many large technology companies in China, told SCMP.

Dowson Tong, a senior director at Tencent Holdings, also said that most of the company's code written this year was created by AI. Speaking during an online event in mid-June, he emphasized that Tencent engineers now mainly play the role of monitoring and periodic testing, spending more time focusing on system architecture and design.

Changing the nature of work forces programmers to increase minimum requirements, or be fired. "We currently require input to be well-rounded programmers," said Rose Cao, a talent recruitment expert at a Chinese AI company. "Even when working in tandem with AI, they need to handle everything from the user interface to the server system."

In fact, the race by AI companies to develop agent tools causes programmers or people who only know 1-2 skills to soon be replaced. In China alone, there is also a thriving programming AI ecosystem, when Moonshot AI has Kimi Work, Tencent launches WorkBuddy, ByteDance with Coze or Alibaba has QoderWork CN. With these tools, the boundaries of who does a particular job are erased. One person can now perform a series of tasks that previously required the presence of a team of experts.

"The ability to use AI has become a mandatory requirement for many employers," Cao said. "It's very difficult to convince employers to hire new people, then spend more time and money on training when the AI ​​agent can already do the job well."

This development worries some experts. According to economist Cai Fang, a member of the Chinese Academy of Social Sciences, the AI ​​wave is "disproportionately" affecting young and old people. Through his research, he pointed out that the employment rate is creating an "inverted U", meaning that only middle-aged workers - those who have accumulated enough experience and are not yet over age - have stable jobs, while the remaining groups face a higher risk of losing their jobs.

According to data released by the National Bureau of Statistics of China early last week, the unemployment rate for people aged 16-24 accounted for 15.6% in May. This number may increase in the near future, when the Ministry of Education of this country estimates that there are 12.7 million university graduates preparing to enter the labor market.

"Scapegoat"

Although AI helps speed up work and requires fewer personnel, experts say the cause is not entirely due to this technology. "The reason businesses are laying off employees just because AI has improved the process is a lie," Tuxi said.

According to this developer, large technology corporations in China have had many years of continuously increasing the number of employees. "AI is simply providing management with a convenient excuse to cut back after a period of massive hiring," he explains.

Previously, a number of experts around the world also had the same opinion. Last month, Nvidia CEO Jensen Huang dismissed a direct cause-and-effect link between AI deployments and tech layoffs, calling it "too superficial" an explanation. Speaking to Channel News Asia, he argued that progress in AI deployment in business is not keeping up with the spike in unemployment, suggesting the volatility is "due to a combination of over-recruitment and the huge costs required to develop artificial intelligence".

According to OpenAI CEO Sam Altman, AI can be a "convenient way" for businesses to justify layoffs. According to CNBC on June 1, he admitted that he is not sure how AI will ultimately affect jobs, but at present, "the companies that apply AI the most that I know are also the ones that recruit the most."

In fact, Chinese businesses both fire and recruit. With Meituan, after running a price war with Alibaba, the company started laying off, mainly in the backend department, but continued to recruit high-level talent. Its Beidou student recruitment program focuses on AI infrastructure talent, large-scale language modeling, embodied intelligence, autonomous agents and drones.

Some do not announce recruitment, but will retrain staff. Speaking at an event in May, Richard Liu Qiangdong, founder and Chairman of e-commerce group JD, said he would train existing employees on robot maintenance to serve automation systems in last-mile logistics.

According to chief economist Guo Lei of analyst firm GF Securities, the macro impact of AI on employment will come in the long term, such as reshaping the nature of work and changing the structure of income. People who do less specialized jobs will lose bargaining power in the labor market, while those who are proficient in AI will gain the upper hand. In the short term, the market may need to overcome the difficult "displacement effect" before exploiting the "recovery effect".

However, for many people working at Chinese technology companies, they are still afraid of their businesses applying "youhua" silently. According to a Meituan employee, his future is "no longer as certain" as before even though it is unknown what the dismissal rate is.

Bao Lam compiled