Artificial Intelligence and Structural Change in China: Industrial Policy, Education Reform, and the Challenge of Labor-Market Adjustment

This thesis investigates the dynamics of structural change in contemporary China, tracing its transition from a Maoist centrally planned economy to the market-oriented reforms initiated under Deng Xiaoping. Utilizing dual-economy theory, the study first analyzes how industrial policy and rural-urban migration fueled China’s historical development trajectory. The core of the research then shifts to the current technological frontier, examining Artificial Intelligence (AI) as the primary driver of contemporary structural transformation. In this context, the thesis explores how Chinese industrial policy frames AI not merely as a tool for enhancing industrial competitiveness, but as a driver for a broader reconfiguration of labor demand and long-term growth patterns. Central to this transition are state-led industrial policies, with particular emphasis on education-oriented interventions, which are presented as key mechanisms for enabling structural transformation. Conceived as foundational pillars for aligning human capital formation with profound changes in productivity and technological development, education policies emerge as indispensable structural instruments and a strategic priority for Chinese policymakers. The thesis further engages with Chinese academic and policy debates on the dual impact of AI on education and employment. On the one hand, these debates increasingly raise ethical and social concerns regarding the use of AI in educational systems; on the other, they highlight that the effectiveness of technological upgrading depends on the state’s capacity to address emerging skill mismatches and labor-market imbalances. By positioning AI-oriented education reforms as a critical link between technological change and sustainable employment outcomes, the analysis shows how China embeds human capital strategy within its broader development framework in order to manage the socio-economic challenges associated with AI-driven structural transformation.