Zofalitsidwa · Malawi

China’s New AI and Employment Policy: What Foreign Founders Need to Know

China’s State Council has issued new guidelines to harness AI for job creation while mitigating displacement risks. For foreign founders operating or registering a company in China, the policy signals support for AI startups, SMEs, and workforce training, along with new compliance considerations.

China’s New AI and Employment Policy: What Foreign Founders Need to Know

The State Council of China has released a set of opinions aimed at adapting to the development of artificial intelligence (AI) technology and fostering an employment-friendly development model. For foreign founders building or operating companies in China, this policy outlines the government’s approach to balancing AI-driven innovation with job stability and worker protection. While the document is broad, it contains several practical implications for business strategy, hiring, and compliance.

Policy Objectives and Guiding Principles

The policy is guided by the need to implement decisions on promoting high-quality full employment while actively adapting to AI. It emphasizes a people-centered development philosophy, combining investment in physical assets with investment in people, and coordinating development with security. The core goal is to use AI to empower high-quality development and achieve high-quality full employment. The policy seeks to enhance AI’s positive effects—creating jobs, empowering traditional positions, improving employment quality, and stimulating entrepreneurial vitality—while effectively mitigating job displacement. The ultimate aim is inclusive development where technological progress, industrial upgrading, employment promotion, and livelihood improvement are coordinated.

Expanding AI-Related Employment and Entrepreneurship

The policy outlines several measures to create new opportunities in the AI field. It calls for deepening the “AI+” initiative, encouraging eastern regions to build core AI industries, and guiding central and western regions to undertake upstream and downstream industries such as data labeling and intelligent terminal manufacturing. This aims to form new growth points for employment. The policy also encourages the cultivation of AI-native enterprises and specialized, refined, distinctive, and innovative “little giant” enterprises. Qualified enterprises may be included in special loan support programs for stabilizing and expanding employment.

For small and medium-sized enterprises (SMEs), the policy introduces an AI entrepreneurship support plan, using open-source ecosystems to foster innovation. It promotes public services for digital transformation, encourages the development of “small, fast, light, and precise” digital products and solutions, and ensures that SMEs and individual businesses can use intelligent production factors such as data and algorithms on an equal footing according to law. SMEs are supported in exploring low-cost, lightweight intelligent upgrading paths to lower the threshold for AI application and enhance their capacity to absorb employment.

The policy also leverages government investment funds, such as the National Venture Capital Guidance Fund and the National AI Industry Investment Fund, to support AI enterprise innovation in a market-oriented manner. It promotes high-level AI open-source communities and implements quality open-source projects to create a job-creation effect through entrepreneurship. It advocates models such as “scientific and technological achievements + entrepreneurship,” “industrial development + entrepreneurship,” “vocational skills + entrepreneurship,” and “livelihood needs + entrepreneurship,” providing entrepreneurship support policies and incubation services for AI application scenario innovation and technology transfer projects.

To accelerate the development of new occupations, the policy calls for quickly developing new occupation standards and expanding demand for roles such as digital managers, AI engineering technicians, and AI trainers. Localities are encouraged to add related professional title evaluation specialties and conduct vocational skill level certifications.

Transforming Traditional Sectors and Mitigating Displacement

The policy aims to tap the employment potential of traditional sectors by using AI to transform and upgrade traditional industries. It encourages human-machine collaboration in the intelligent development of industrial factors and the digital transformation of agriculture. It also promotes new AI-driven service models, advancing producer services toward specialization and higher value chains, and fostering high-quality, diversified, and convenient consumer services. Expanding service consumption scenarios such as experiential and personalized consumption is expected to increase employment capacity in the service sector.

To mitigate the employment substitution effects of AI, the policy prioritizes AI application in positions with labor shortages or high-risk environments. It calls for a prudent approach to the scope, intensity, and pace of AI application in labor-intensive industries to minimize impact on workers. Enterprises are encouraged to explore unemployment buffer periods, providing advance notice and transition support for affected workers during large-scale AI deployment.

A mechanism for assessing employment risks of AI applications will be established. This includes comprehensive evaluation of AI’s employment impact, guiding innovation resources toward areas with greater job creation potential, and conducting employment risk assessments for AI application projects that may cause significant employment shocks in market access fields. Relevant departments will coordinate transition and job transfer support.

Talent Cultivation and Training

The policy emphasizes collaborative cultivation of AI innovative talents. Regular higher education institutions and vocational schools (including technical schools) are encouraged to dynamically optimize subject offerings, make extraordinary arrangements for urgently needed AI disciplines, strengthen interdisciplinary programs, increase “micro-major” offerings in AI, and implement composite talent training projects. School-enterprise joint training is encouraged, with support for leading technology enterprises to participate in curriculum development, teacher training, and teaching facility upgrades. AI education will be promoted at all stages, including student internships in enterprises and enterprise engineers teaching in schools.

A special AI training plan will be implemented, deepening the “Skills Illuminate the Future” training action. Localities are encouraged to closely align project-based and order-based digital technology skills training with AI market demand, and to encourage college graduates, young people, migrant workers, and unemployed persons to participate in AI employment and entrepreneurship training programs. Public training bases, enterprise training bases, and high-skilled talent training bases are encouraged to actively conduct AI-related skills training. Public AI literacy education will be advanced through national smart education platforms and other online learning platforms, offering more public welfare courses. AI-related skills competitions are encouraged within existing vocational skills competitions.

Improving Employment Services and Worker Protection

The policy calls for using AI to assist in implementing employment policies, exploring intelligent identification mechanisms to analyze service recipient characteristics and push employment policies intelligently. AI will be applied in policy evaluation, fund management, publicity, and consultation. The national employment information resource database, the national college student employment service platform, and the “China Employment” public service platform will be upgraded to strengthen data collection, intelligent analysis, and precise services. The construction of national AI application pilot bases will be promoted, and the intelligent upgrading of grassroots public employment service networks will be explored. AI will also be applied in labor dispute mediation and arbitration. The policy encourages market entities to innovate products such as job matching large models, intelligent interviews, and virtual reality training.

Support for transition and job transfer will be increased. Eligible workers affected by AI-induced job substitution will receive targeted career guidance, skills training, job recommendations, and entrepreneurship support. Unemployment insurance benefits will be paid in full and on time to eligible insured unemployed persons.

The policy also addresses worker rights protection in human-machine collaboration. Research on basic rights protection will be strengthened, and consultation and coordination mechanisms will be improved. Enterprises are urged to legally protect workers’ rights to labor remuneration, rest and leave, and occupational safety and health. The use of AI in human resource management will be regulated, and illegal acts such as employment discrimination, false recruitment, and infringement of privacy and rest rights caused by algorithm abuse will be governed according to law.

Social security systems for flexible employment and new employment forms will be improved. Flexibility and inclusiveness of social security will be enhanced, encouraging flexible workers and those in new employment forms to participate in urban employee basic pension insurance, and expanding pilot programs for occupational injury protection for new employment forms. The policy aims to use the dividends of AI development to better protect employment and improve livelihoods.

An income distribution mechanism adapted to AI development will be improved. Enterprises are guided to establish compensation systems suited to AI practitioners, improve incentive mechanisms for high-level talents oriented toward increasing knowledge value, and implement classified minimum wage reference guidelines for skilled talents. The policy encourages the development of innovative work forms such as intelligent agents and increased investment in public-interest AI technology, services, and open-source communities to help workers expand their capabilities and enhance labor value.

Monitoring, Research, and Risk Response

The policy strengthens monitoring and early warning of employment risks from AI applications. Cross-departmental sharing of AI-related industry and employment data will be enhanced, and regional and industry-specific intelligent monitoring and analysis models will be built. Early research and judgment of employment risks will be strengthened to improve sensitivity.

Research on the employment impact of AI will be intensified. Special surveys will be conducted to track AI application penetration, job creation and substitution, and changes in skill demand. AI employment research centers will be established relying on universities and research institutions. National Social Science Fund projects will be implemented to study the impact of AI on employment and income distribution prospectively.

A risk response mechanism will be improved. Employment risks from AI will be included in the scope of mechanisms for preventing and resolving large-scale unemployment risks, and response plans will be formulated. Joint responses to AI-related labor relations risks will be strengthened, with risk consultation, judgment, and disposal.

Implications for Foreign Founders

For foreign founders registering or operating a company in China, this policy signals several opportunities and compliance points. First, AI-focused startups may benefit from government-backed venture funds, support for SMEs, and open-source initiatives. Second, if you operate in labor-intensive industries, be mindful of the policy’s emphasis on prudent AI deployment and worker transition support—planning gradual implementation and offering retraining can align with regulatory expectations. Third, compliance with worker rights in AI-driven management is crucial; avoid algorithmic practices that could lead to discrimination or privacy violations. Fourth, talent cultivation initiatives suggest greater availability of AI training programs and potential partnerships with educational institutions. Finally, the policy’s focus on employment risk assessment may affect project approvals in certain sectors, so early consultation with local authorities is advisable.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.