By Andrew Miller
China wants to be the global leader in AI by 2030.
The country has spent billions in public funding to support its AI ecosystem, including a five-year, $138 billion special loan from the Bank of China.
In addition, local cities like tech hub Hangzhou have their own state-led funds for AI research. Hangzhou has one of the country’s most advanced AI labs. It’s also home to tech giant Alibaba and the controversial DeepSeek AI.
Despite the country’s aggressive push for AI, a court case in Hangzhou just pushed back on the momentum.
Every Wednesday in The Signet Letter, we cover what’s happening in the world that isn’t always getting the attention it deserves. Now, back to the story…
The case involves a tech worker from Hangzhou. The man, known as Zhou, worked as a quality assurance supervisor for AI models. His job was to review the results to ensure accuracy and filter illegal content.
Eventually, his employer decided that AI could review its own work. They suggested Zhou take a 40% pay cut. When he refused, they fired him.
So, he took his case to the Hangzhou Intermediate People’s Court. The court ruled that companies can’t terminate an employee’s contract based on the argument that technology has replaced their job. The judge also deemed the drastic pay cut unreasonable.
Zhou was awarded compensation of 260,000 yuan from his former company.
While the ruling doesn’t ban AI-related layoffs outright, it does close a corporate loophole using automation to cut headcount without meeting the required legal obligations to do so.
Meanwhile, in the U.S., 81,700 tech workers were laid off in the first quarter of 2026. Nearly half were the result of automation at firms like Meta, Oracle, and Google. American workers have no equivalent legal protection. So far, no one in Washington has moved to create any.
P.S. The rules around AI are still being written. The rules around business funding are a little clearer. Signet can get your business funded in as little as 24 hours.