China\u2019s long\u2011running wave of corporate layoffs is spreading from manufacturing and property to the technology sector, with some key firms cutting hundreds of engineering jobs as core businesses weaken and artificial intelligence (AI) growth remains uneven.<\/p>\n
Recent job cuts at Baidu and Lenovo\u2019s Infrastructure Solutions Group (ISG), alongside years of downsizing at Alibaba Group, show technology is no longer insulated from China\u2019s broader slowdown and job losses.<\/p>\n
China\u2019s jobless rate for 16-to-24-year-olds, excluding college students, stood at 17.3% in October, slightly down from 17.7% the month prior, the most recent data from the National Bureau of Statistics showed, according to a Reuters report.<\/p>\n
The unemployment rate for 25-to-29-year-olds, excluding students, remained unchanged at 7.2% from a month earlier, while the jobless rate for 30-to-59-year-olds fell to 3.8% from 3.9%, the data showed. It\u2019s not immediately clear how the recent wave tech layoffs will impact those figures. <\/p>\n
Baidu began<\/a> a year\u2011end workforce adjustment in late November, affecting multiple business lines, according to Chinese media reports. Some non\u2011core departments reportedly faced layoff ratios of 20-30%. <\/p>\n Severance packages were reportedly set at n+3 months, with some employees getting n+5, where \u201cn\u201d refers to the number of years of service at the company.\u00a0Affected staff are required to complete handovers before the end of December.<\/p>\n The layoffs followed a deterioration in Baidu\u2019s third-quarter performance, particularly in its core advertising business. In the three months ended September 30, Baidu\u2019s online marketing revenue fell 18% year\u2011on\u2011year to 15.3 billion yuan (US$2.16 billion), a decline that exceeded market expectations and occurred despite a 1% increase in monthly active users on its app.<\/p>\n By contrast, AI\u2011related non\u2011online marketing revenue, including cloud services, autonomous driving unit Apollo Go and smart home devices such as Xiaodu, rose 21% to 9.3 billion yuan. iQiyi, Baidu\u2019s online video streaming subsidiary, saw revenue decline 8% to 6.7 billion yuan.<\/p>\n While AI revenue growth has remained positive, its pace slowed sharply from the second quarter, when it grew 34% year\u2011on\u2011year. The third\u2011quarter increase in the AI segment was largely due to a low base last year.<\/p>\n \u201cAI businesses now account for about 30% of Baidu\u2019s revenue, compared with 58% from advertising and 12% from iQiyi,\u201d writes<\/a>\u00a0Lynne, a columnist for Xueqiu.com, a financial news website. \u201cEven if AI revenue can sustain annual growth of around 20%, it would take about three years for AI to reach 50% of total revenue.\u201d\u00a0<\/p>\n She adds that if advertising and iQiyi revenues continue to decline, AI growth would at best be enough to offset those losses rather than restore overall growth.<\/p>\n \u201cMost AI revenue comes from capital\u2011intensive businesses such as cloud services or Apollo Go,\u201d she says. \u201cThese are far more expensive to operate than advertising, which means that even if AI revenue eventually matches advertising in size, its profit contribution could still be lower.\u201d<\/p>\n Relocation to India<\/p>\n Lenovo\u2019s ISG, which supplies enterprise customers with data center and edge-computing infrastructure such as servers and storage systems, became the focus of public attention on December 1, when a mass layoff unfolded at its Shanghai operation.<\/p>\n What had been scheduled as an online staff briefing for China\u2019s ISG unit began<\/a> 13 minutes late and ended with a two-minute pre-recorded audio message about the company\u2019s downsizing plan for software, firmware and operating system teams in China, according to multiple media reports. A total of about 270 people were sacked, including all staff at the Shanghai site and others in Beijing, Tianjin and Shenzhen.<\/p>\n Lenovo\u2019s 2024\/25 annual report showed ISG revenue surged 63% year\u2011on\u2011year to a record $14.5 billion, with China-based revenue doubling in a single quarter. But the growth masked profitability strains. In the six months ended September 30, ISG recorded an operating loss of about $118 million, its third consecutive half\u2011year loss, following deficits of $114 million and $73 million in the previous two periods.<\/p>\n \u201cSince new chief technology officer Tolga Kurtoglu took office in July 2024, Lenovo has been pushing a strategy of globally centralized research and development resources,\u201d a Beijing\u2011based columnist writing for Sina Finance says<\/a>. \u201cThe Bangalore research center in India continues to expand, while China\u2019s software teams, with higher labor costs, have become a key target for optimization.\u201d<\/p>\n \u201cBesides, ISG appears to be moving away from a software\u2011hardware integration model toward a more hardware\u2011centric approach,\u201d the columnist adds. \u201cSome lower\u2011return basic software teams are being stripped out, while resources are being concentrated on higher\u2011margin areas such as AI infrastructure and liquid\u2011cooling technologies.\u201d<\/p>\n \u201cThe core obstacle for Lenovo to improve its profitability is the lack of proprietary technologies,\u201d says<\/a> Zhang Xiaorong, director of the Jiangsu\u2011based Deep Institute.\u00a0\u201cKey elements of Lenovo\u2019s AI solutions, including chips and large language models, rely heavily on external partners, leaving the company without strong technological barriers.\u201d<\/p>\n He also says that Lenovo faces intense competition from major technology companies across multiple fronts, while lacking clear innovation advantages of its own.<\/p>\n AI deepens economic drag<\/p>\n Over the past several years, China\u2019s property and manufacturing sectors have steadily shrunk. In manufacturing, many electronics producers have shifted capacity to Southeast Asia \u2014 including Vietnam, Thailand and Indonesia \u2014 to cut costs and avoid punitive US tariffs, leaving large numbers of low\u2011paid factory workers jobless.<\/p>\n The property sector has followed a similar path. The collapse of China Evergrande Group in late 2021, followed by failures among smaller developers, triggered layoffs across construction, property agencies and supplier networks. The job losses have squeezed household incomes and consumption, increasing pressure on internet and technology companies that rely on advertising and discretionary spending.<\/p>\n Beyond the economic slowdown, AI adoption has emerged as a key driver\u00a0of job cuts at major technology platforms in\u00a0China. Alibaba Group is following the footsteps of American technology companies, such as Amazon and Google, to reduce headcount as AI takes over labor\u2011intensive tasks.<\/p>\n Alibaba\u2019s own disclosures point to the scale of adjustment underway among internet platforms. The company\u2019s annual reports show<\/a> that its full\u2011time workforce stood at\u00a0254,941 as of March 31, 2022, and\u00a0fell to\u00a0235,216 in 2023 and\u00a0204,891 in 2024. It fell further to 124,320 by March 31, 2025, though that sharp decline was mainly due to sales of subsidiaries.\u00a0<\/p>\n \u201cAlibaba\u2019s workforce has shrunk from a peak of about 250,000 to fewer than 200,000, equivalent to wiping out the employment of a medium\u2011sized city,\u201d says<\/a> a Guangdong\u2011based columnist writing under the pen name Little Q. \u201cThis \u2018surgery\u2019 has taken place alongside a massive push into AI, with cloud intelligence teams still expanding while traditional business lines are streamlined.\u201d\u00a0<\/p>\n \u201cWhen Pinduoduo can generate comparable gross merchandise volume (GMV) with just 8,000 employees, Alibaba realized that manpower alone no longer creates an advantage,\u201d he says. \u201cAI has replaced about half of the customer service workforce in Taobao, while Cainiao\u2019s unmanned warehouses have lifted efficiency by more than 40%.\u201d<\/p>\n A Chinese commentator says once-prestigious P8-level roles in Tencent have become a key layoff target as AI tools reduce the need for senior planning and coordination. She says P8 engineers are veteran technical specialists with annual base salaries typically ranging from 750,000 to more than 1.18 million yuan, roughly equivalent to the cost of three AI engineers. At the same time, AI-driven tools in gaming will replace large parts of art design and operations teams, the commentator said.<\/p>\n Read: US isn\u2019t winning trade war despite drop in its imports from China<\/a><\/p>\n Follow Jeff Pao on Twitter at\u00a0@jeffpao3<\/a><\/p>\n \t