China’s Gdp Growth Through Ai: A Double Edged Sword Of Benefits And Workforce Risks
Asia
Business
Artificial intelligence is the new workforce language around the globe with most sectors embracing this new technology to match the current technological wave. Introducing AI and AI-powered services and processes in China presents a complex landscape concerning GDP and the labor market. Although the roots of AI in China are traced to the 1970s, the Chinese government embraced AI in the early 2000s. Baidu’s Ernie Bot is the most used AI in China and is mostly preferred due to its efficiency in understanding the natural Chinese language. Most individuals choose this AI chatbot because of its knowledge integration and ability to handle large data sets compared to others. The International Monetary Fund (IMF) data indicates that as of 2025 the Chinese GDP is around 19.5 trillion dollars, which marks a growth rate of about 2.8% and is estimated to grow at a rate of about 4.5 % in 2026. The growth is attributed to various factors which have relied on AI including manufacturing and high-tech investment. AI has taken over most sectors in the Chinese community and the globe which are economically and socially impactful. While the country trains employees to work in various fields, the automation of processes has a detrimental impact on the labor market, including outpacing new job creation. According to the IMF, AI is likely to affect 40% of the jobs in the world and the Chinese workforce is not an exemption. In the next 10 years, AI is estimated to increase global GDP by 7% representing 7 trillion dollars. Despite the argument that AI is contributing to the growing GDP of China, there is a need to evaluate the contribution of job losses to the GDP and whether is likely to cause a pull to the anticipated GDP growth. Owing to the scenario, it is key to evaluate the probable outcomes and develop formulas and strategies to maintain a balance and steer economic growth. According to the IZEA China Trust report, Chinese are more comfortable engaging with AI influencers as compared to Americans. This demonstrates the level of confidence in AI models in China and most Asian countries. The report is also backed up by the news agencies that report that there are increased AI livestream hosts in China and high engagement from audiences. The Asian continent led by China has historically been known for its innovation and embracement of technology. Countries such as China and Singapore are known as digital countries following the many innovation hubs. In China and Singapore, AI has steered economic growth through sectors such as logistics, healthcare, and manufacturing. In the next two decades, the country looks forward to further automation of about 26% of the existing jobs which creates a different scenario of livelihood and survival of Chinese employees. Despite the positive implications of AI such as the anticipated GDP growth of 10-18% by 2030, it is critical to evaluate whether policies are protecting the well-being of employees. Arguments to support the use of AI claim that technology embraces an educated and productive workforce. Although this argument could be true, the big question is whether AI can integrate all students and trained workforce without job losses. The labor market is already shrinking. Software development, education, healthcare, finance, customer service, and sales have faced worker displacement and decline. PWC argues that the anticipated AI long-term effects in China are uncertain and could either be optimistic or pessimistic. Disruption of millions of workers and businesses is a major change that can turn around an economy. When people lose their sources of livelihood such as income and jobs, the GDP decreases which leads to a ripple effect and can potentially cause a recession. Although China among other countries in the world is undergoing a recession after the Covid 19 pandemic, China is experiencing an economic slowdown due shrinking workforce and other factors. The shrinking workforce is a result of AI which has displaced many employees in major sectors. After evaluating the nominal GDP growth target in 2023 and 2024, it is evident that it is experiencing an economic slowdown. China, in its quest to dominate AI and overtake the US, must consider creating a balance to mitigate economic challenges due to innovation. The challenge at hand to create a balance lies in the hands of the Chinese government to develop policies that maximize AI benefits and mitigate impacts such as income inequality and jobs. To overcome and mitigate AI impacts on the GPD and income effect, the Chinese government should consider slowing and gradually introducing new business models that are technologically relevant in specific sectors to avoid disruption and displacement of the workforce.
10 DAYS AGO
