May 03, 2026

The Political Limits of China’s AI Diffusion Ambitions

By: Ruby Scanlon

This article was originally published in Lawfare.

When a Beijing-based company replaced an employee, identified as Liu, with an automated system, it likely expected China’s courts to side with its decision. After all, the government’s AI Plus initiative targets 70 percent AI adoption across key sectors by 2027 and 90 percent by 2030. Instead, the court sided with Liu.

Beijing’s drive to diffuse AI will increasingly run up against its commitment to employment stability and fear of collective action.

In a 2025 ruling, a Chinese court ruled that replacing a worker with AI is not valid grounds for dismissal and that firms must first attempt contract renegotiation, retraining, or internal reassignment. Beijing’s labor bureau subsequently published the decision as a “model case,” the Chinese judicial system’s rough equivalent to stare decisis in the United States, signaling how similar disputes should be handled. The case is emblematic of a shift in how Chinese policymakers are preparing for the possibility of AI-driven labor displacement and may foreshadow slowed diffusion of AI in China in favor of worker protections and economic stability.

Read the full article in Lawfare.

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