The government also wants to educate and train people to realise its AI ambitions. While young people struggle to find jobs, the country anticipates needing many millions more workers in skilled manufacturing and AI research (even with China already having more AI researchers than America, Britain and the EU combined). Primary and secondary schools are incorporating AI lessons into their curricula. Universities are funnelling students into thousands of new degree programmes in such fields as “embodied intelligence” and “agricultural robotics” after cutting thousands of “obsolete” degrees, mostly in the arts and humanities. The state is also subsidising retraining as well as promoting vocational education in areas like the “low-altitude economy” (including, say, flying taxis). Many of those who fall through the cracks will find a threadbare safety-net, including meagre social security and minimal health insurance. Zheng Gongcheng, head of the China Association of Social Security, warned the legislature last year that the more that AI and robots replace workers, the fewer wage-earners there will be left to pay into the welfare system to support those out of work. He suggested a new tax on robot-enabled productivity gains. Luo Zhiheng of Yuekai Securities, who has briefed Chinese leaders, floated taxing the “excess profits” of AI firms. Some economists and former officials want new subsidies like AI- unemployment insurance and cash handouts. “The more disruptive a technological revolution or industrial transformation, the greater the intensity of creative destruction and the more inadequate market mechanisms are in protecting workers’ rights,” Mr Cai, who previously held a vice-minister level role, wrote in a June front-page editorial in the central party school’s paper.
The constituency that might agitate for more goodies from the state is getting larger. The number of “flexible workers” that make up China’s vast gig economy—its food-delivery and ride-share drivers, livestreamers, factory day labourers and the like—will swell to 320m this year, up from 280m in 2025 and double its size in 2019, estimates the China New Employment Forms Research Center, a think-tank (see chart). Firms and policymakers have taken modest steps to include more of them in the social- security system, lest their precarity transform into unrest. AI could increase the pressure to do more. Still, no ambitious scheme seems likely anytime soon. The government guards its pennies when contemplating subsidies, and Xi Jinping, China’s president, has professed an aversion to “welfarism”. As more robotaxis take to the streets, ride-share drivers will have to scrape by. So will Mr Li, the actor, while his bosses flourish. In an office tower in Zhengzhou, Zhang Lei runs Mengchang Media, a studio. “AI-crafted microdramas—creativity beyond imagination,” reads one slogan. Mr Zhang used to have ten crews shooting every day. Now, row after row of humans called choukashi—literally “card-drawers”, an AI-era term that calls to mind randomly drawing cards and hoping for a
good one—write prompts specifying, for instance, a close-up of a character’s furrowed brows, “his expression full of gratitude and expectation”. Software spits out seconds-long scenes that a choukashi tweaks and sequences. There is not a cameraman, lighting crew or actor in sight.■ This article was downloaded by zlibrary from https://www.economist.com/briefing/2026/08/06/chinas-ai-drive-threatens-the-worlds- largest-workforce
How AI-fuelled wealth is reshaping South Korea A temple scandal rocks India’s ruling party The Philippines’ big offshoring industry is growing despite AI New Zealand’s foreign minister sparks ire with a detestable taunt India’s monsoon is getting weirder
How AI-fuelled wealth is reshaping South Korea Leaders must decide how to manage a big windfall Aug 6th 2026 AN UNKEMPT man walks into a pricey shop. The staff dismiss him—until he takes off his jacket and reveals a gilet emblazoned with “SK Hynix”, a semiconductor firm known for handing out massive bonuses. This imagined scene—a recent skit on a South Korean comedy show—lampoons real ones unfolding as AI-driven wealth floods the country. Companies that help arrange marriages report a big jump in the desirability of engineers from SK Hynix and Samsung Electronics, another semiconductor-maker. They are now nearly as sought after as doctors and lawyers. An AI windfall is reshaping South Korean society. Speaking in Silicon Valley on July 25th, Lee Jae Myung, South Korea’s president, compared the AI era to the discovery of fire and called it “a truly new opportunity for
Korea”. But the new era also brings risks: South Korea’s benchmark stock index, KOSPI, has doubled in value in the past year but dipped 22% in July. A series of wild swings have made it the most volatile stock market in the world. Fierce debates rage in Seoul over how to ensure that new wealth is shared equitably and stewarded sustainably. “This raises a new policy challenge for us: how should we approach such extraordinary excess profits from a socioeconomic perspective and from the standpoint of national policy?” Mr Lee said during an interview with The Economist in June. The following month his government announced a “Future Response Fund” to invest newfound tax revenue for generations to come. The market gyrations and policy debates are a preview of processes likely to play out elsewhere as AI adoption spreads. “This is an issue that requires broader international discussion,” Mr Lee added. Wealth is flowing into South Korea because its firms provide infrastructure AI model-makers need, such as high-bandwidth memory chips. South Korean officials speak of producing “picks and shovels” for an AI gold rush. While the gold miners may or may not hit paydirt, the pickmakers (or, rather, the chipmakers) are already flush. On July 30th Samsung Electronics said operating profit in the second quarter was 89.5trn won ($63bn), up
1,800% from a year earlier. One day earlier SK Hynix said operating profit in the same quarter grew 557%, year on year. Their workers want a bigger share. Last year SK Hynix agreed to set aside 10% of its operating profit for bonuses. Samsung’s powerful labour union threatened a strike in May, demanding a cut of soaring profits. A last-ditch agreement staved off a factory shutdown; some bonuses will exceed $400,000. Such payouts are unheard of in a country where the average annual salary is less than $40,000. A new class of workers has been minted: neither white- nor blue-collar, but “silicon-collar”. Yet the spoils have largely been limited to chip-industry insiders. The government recently raised its GDP growth forecast for 2026 from 2% to 3%, but that is largely thanks to booming exports. Except near chip factories, consumption has been sluggish. People outside the industry have looked to equities for a piece of the action. Retail investors poured 78trn won ($54bn) into South Korean stocks in May and June; many were burned when shares fell in July. The broadest benefit will be fiscal, as corporate- and income-tax revenues flood government coffers. Corporate-tax receipts from Samsung and SK Hynix alone could yield as much as the government expected to receive in
total from corporate taxation this year. Overall tax revenue is projected to reach 500trn won next year, equal to 17% of GDP and a record high. Policymakers are grappling with how to manage the windfall. Kim Yong- beom, Mr Lee’s chief domestic-policy adviser, sparked debates in May with a personal Facebook post musing about a possible “citizen dividend” funded through excess tax revenues. Speaking to The Economist, Mr Lee suggested that a basic income could be one of several useful policy options. One faction is arguing for more sweeping redistribution. Chipmakers’ success was made possible by “long-term public investment by the state and support from taxpayers and the public”, and should be returned in part to the public, says Oh Jun-ho of the Basic Income Research Institute. Proposals include creating new top corporate-tax brackets for higher-earning companies, imposing windfall levies, or giving the public stakes in the firms. Labour groups call for funnelling the proceeds of potential new taxes first to chipmakers’ subcontractors. The entire industry takes a hit during downturns, and “the same should apply when massive profits are generated”, says Lee Gyeo-re of the Korean Confederation of Trade Unions. Others see such calls as misguided. Chipmaking requires continuous investment: new levies could discourage it. The public’s claim to revenues generated by private-sector electronics firms is not akin to its right to benefit from nationally owned oil and gas companies—even if some in South Korea like to compare them. It is true that AI labs have trained their models using data created by whole societies. But that is not the game South Korea’s chipmakers are in, says Rhee Chang-yong, a former governor of the Bank of Korea: “They benefit from AI, but they are not AI.” For now the government is trying to strike a balance between protecting the private sector and spreading the wealth. The proposed Future Response Fund is the first attempt at creating a mechanism to do that. Mr Lee says it will use only the extra tax revenue flowing into government coffers through existing channels, and will support future industries, young people, regional development and education. Other initiatives aim to direct the next wave of investment. Last month officials announced separate plans to inject at least 20trn won ($14bn) into
the Korea Investment Corporation, an existing sovereign-wealth fund, for additional investment in AI, data centres and supporting infrastructure. The government also wants chipmakers to direct capital spending to less- developed regions. South Korea is enjoying a magic moment, Mr Rhee says. “But we shouldn’t have a big party—we need to think about how to maintain our competitiveness into the future.” ■ For exclusive coverage of Asian politics, economics and security, sign up to Asia Bulletin, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com/asia/2026/08/04/how-ai-fuelled-wealth-is-reshaping-south- korea
A temple scandal rocks India’s ruling party One of Narendra Modi’s proudest achievements is under scrutiny Aug 6th 2026 On July 31st Pappu Yadav arrived at India’s parliament in Delhi dressed as a Hindu priest and armed with a donation box. The independent MP sat near the entrance to the building. One by one opposition MPs, including Rahul Gandhi, their leader, stepped up to drop money in the box. But on each occasion the fake priest snatched the cash, earning wild cheers from a crowd. The satirical skit was livelier than most parliamentary discussions. Mr Yadav and the others were drawing attention to allegations of large-scale theft at the Ram temple in Ayodhya, in Uttar Pradesh, India’s most populous state. Staff at the temple, which receives millions of visitors each year, have been accused of siphoning donations from devotees. Some of the alleged theft has