Debunking the 'Authoritarian Advantage' Myth! The Economist Cover Story: AI-Driven Job Disruption Is Testing China's Political Resilience

As the world’s leading artificial intelligence models race toward peak computational power and performance, the political and social systems of the U.S. and China are also being tested by AI. The latest issue of The Economist features a cover story titled 'Why AI is a risk to Communist China,' challenging the widely held belief that authoritarian China holds an advantage in mobilizing new technologies. While China is indeed rapidly deploying AI, the expanding impact of AI on the real economy—particularly rising unemployment and social unrest—is now testing the resilience of the Chinese Communist Party’s governance. The actual impact of AI on China may be 'far less positive than many imagine.' Its advantages are not quite what they seem. Its disadvantages are profound.

On August 6, The Economist noted that while China’s AI models were previously seen as cheap but technologically inferior, recent data shows that Chinese and American AI models are rapidly converging in performance, with the gap narrowing significantly. China’s recently launched 'Qwen3.8-Max' by Tongyi Qianwen and 'Kimi K3' by Moonshot AI now perform nearly on par with Anthropic’s top-tier U.S. model, 'Fable 5.' The magazine even warns that Chinese AI models, like their American counterparts, carry the risk of失控 (loss of control) outside controlled testing environments. However, the U.S. evaluation authority 'Artificial Analysis' points out that when considering cost-effectiveness and real-world performance, American AI models still outperform Chinese ones.

(Image source: Moonshot AI official website)

Although China’s AI infrastructure in hardware and computing power is only one-tenth the scale of the U.S., the widespread use of open-weight models—which can run on any server—suggests that the computing power gap may not be as severe as it appears. Moreover, Southeast Asia is building massive data centers for China, and Huawei is accelerating its independent chip development and production. Domestic lithography machines can now manufacture chips using deep ultraviolet (DUV) technology, with China closing in on the final leg of mastering extreme ultraviolet (EUV) lithography.

The Economist emphasizes that while China lags behind the U.S. in AI model development, its strength lies in application. Chinese leaders believe that promoting AI adoption is the best competitive strategy, offering greater returns than developing new models. With China’s labor force projected to shrink by 25% by 2050, there is strong incentive to deploy AI to fill labor gaps. However, the AI boom is already disrupting jobs in key sectors:

In logistics and transportation, AI-assisted driving has reduced truck crews from two drivers to one, and from four to three, cutting driver demand by 30%. In the film and entertainment industry, 95% of the 128,000 popular micro-dramas released in China in Q1 2026 were AI-generated, leaving many actors and crew members unemployed.

Additionally, in June, the Chinese government ordered local governments and state-owned enterprises to deploy 10,000 humanoid robots by year-end. Morgan Stanley predicts that humanoid robot sales in China will reach 446,000 units by 2030—nine times this year’s total. In large warehouses, many workers are now training robots to fold clothes, sort, and stack items.

The Economist warns that because China has a lower proportion of white-collar workers than the U.S., AI adoption will disproportionately impact blue-collar workers and the consumer market. With youth unemployment already at 15% and over 300 million people surviving in the gig economy, the pace of AI-driven job destruction may far outstrip the rate of population aging.

Facing AI-driven disruption, even the Chinese Communist Party fears instability. While some may assume authoritarian regimes can ignore social backlash, The Economist argues that autocrats are deeply concerned about power stability. Although Chinese companies push for rapid AI adoption, the government seeks to avoid social unrest—this is why AI is seen as a test of the regime’s resilience. Both the U.S. and China emphasize 'retraining,' but even top performers like Denmark and Singapore struggle to help workers transition into entirely new roles. With millions of university graduates entering China’s job market annually, there is no reason to believe China will fare better.

In response to AI-driven unemployment, some Chinese scholars have proposed an 'AI tax' or 'Universal Basic Income' (UBI), ideas even published in party media—suggesting Beijing may be considering such measures. However, The Economist cautions that President Xi Jinping has long opposed welfare handouts, believing they make people 'lazy.' If Beijing forces companies to 'reassign rather than lay off' or requires state-owned enterprises to absorb surplus labor, such measures could severely offset AI’s benefits, especially amid slowing economic growth.

On July 23, 2026, the Gene.01 humanoid robot demonstrated a waving motion at the AMD Advancing AI 2026 conference in San Francisco, USA. (AP)

The Economist suggests China may adopt a compromise: allowing AI to develop freely, then intervening forcefully when problems arise. This 'stop-start' governance model has precedents in online tutoring and video gaming, where sudden crackdowns paralyzed entire industries once authorities deemed the risks too high. Recently, autonomous taxi (Robotaxi) tests in Wuhan, Hubei, encountered malfunctions, prompting cautious officials to slow down trials. However, this stop-start intervention severely undermines AI innovation in China. Leaders are thus forced to balance the risks of 'social unrest' against 'falling behind the U.S. in AI competition.'

Of course, the U.S. faces similar challenges, but The Economist concludes that when both nations confront the need for systemic reform, democracies are generally better equipped to adapt than authoritarian regimes.