Due to escalating political tensions between the US and China, McKinsey has restricted its China office from participating in generative artificial intelligence (AI) projects. This move represents the company’s retreat from one of the most promising sectors in the Chinese market.
In recent months, McKinsey instructed its mainland China office to refrain from involvement in generative AI-related work. This decision followed increased US scrutiny over companies operating in sensitive sectors in China.
The ban covers generative AI projects within the China office that serve multinational clients, but the office continues to work with existing AI products already integrated into clients’ operations.
A source indicated that this policy may limit McKinsey’s ability to secure new business, as generative AI plays a central role in corporate strategies and IT systems, such as chatbots.
McKinsey has faced criticism from US lawmakers for working with Chinese state-owned enterprises and local governments while also holding contracts with the US Department of Defense. Last year, McKinsey’s global managing partner, Bob Sternfels, was questioned by Congress about the firm’s ties to the Chinese government.
Although the US government has not officially banned consulting on AI in China, it has sought to slow the development of China’s AI industry by tightening export controls on advanced chips and limiting American investments in Chinese technology companies.
McKinsey’s stance is more cautious than some competitors. A source from another US consulting firm said they avoid clients blacklisted by Washington but continue AI-related work for other Chinese clients through their mainland-based teams.
This move comes amid a broader trend of foreign professional services firms—including law firms, consultancies, and investment banks—scaling back or withdrawing from China due to geopolitical tensions and a slowing economy.
Chinese companies are increasingly turning to cheaper local competitors, while many multinationals are either exiting China or significantly reducing their investments.
McKinsey has reduced its workforce in mainland China, Hong Kong, and Taiwan from about 1,500 in 2023 to approximately 1,000.
Nevertheless, McKinsey continues to position itself globally as a leader in AI transformation. The firm has developed AI chatbots and other tools to automate internal tasks, while its AI-focused unit QuantumBlack builds and deploys systems based on large language models.
Regarding the ban, McKinsey said: “Last year, we strengthened our client service policies in China, where our work now mainly focuses on multinational and Chinese private sector firms.” The company added, “We apply the most rigorous client selection policy in our profession and continue to evolve and strengthen our approach.”
