China’s top priority should be wages, not AI

China must prioritize increasing wages over advancing artificial intelligence, according to a former factory worker. Despite China's massive investment in AI, estimated at $184 billion since 2000 according to Stanford University's 2026 AI Index, many ordinary Chinese people still earn insufficient incomes. In 2022, the average migrant worker earned only 5,075 yuan (US$758) per month, a paltry 2.3 percent increase from the previous year.

Retail and hospitality workers fared slightly better at 4,382 and 4,208 yuan respectively. Economist Dr. Alicia Garcia-Herrero calls this situation a "dual economy", where China produces cutting-edge technology and exports, but household incomes and consumption remain stagnant. MIT economist Yasheng Huang argues that low wages are fundamental to China's manufacturing success, as they allow the country to compete with poorer nations in textiles and other goods.

However, Huang points out that the share of manufacturing profits going to workers has significantly decreased from 6.3 percent in 1992 to 1.8 percent in 2010, recovering only slightly to 3.3 percent in 2024. This indicates that when workers' purchasing power is suppressed, they cannot buy the products they helped create, creating a paradoxical situation.

If China wants to boost domestic consumption, it must address the issue of low wages. Reducing the burden of essential services like healthcare, housing, and education could also encourage households to spend more rather than save. While AI may enhance productivity and spur new industries, it should not become an end in itself. Instead, China should ensure that technological progress benefits its people and does not solely serve as a justification for an arms race with the United States.