McKinsey bars China practice from generative AI work amid geopolitical tensions
has stopped its China business from undertaking consultancy work related to generative
artificial intelligence
amid geopolitical tensions, excluding it from one of the most potentially lucrative markets for consultants in the country.
The US firm instructed its mainland Chinese operation to refrain from projects deploying generative AI in recent months, according to two people with knowledge of the matter. One of the people said the move was prompted by Washington's growing scrutiny of US companies operating in sensitive sectors such as AI and quantum computing in China.
The ban extends to projects in the mainland offices of multinational clients, but does not stop McKinsey's China business from working with companies that have more established forms of AI in their products.
One person with knowledge of the matter said the policy could constrain McKinsey's ability to secure new business, given the central role generative AI now plays in corporate strategy and IT systems through products such as chatbots.
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McKinsey has previously come under fire from US lawmakers for working with Chinese state-owned enterprises and local governments while also holding contracts with the US defence department. Bob Sternfels, McKinsey's global managing partner, was questioned by Congress last year over the consulting firm's alleged ties to the Chinese government.
Although the US government has not imposed any explicit ban on consultancies advising on AI in China, it has sought to curtail the development of China's AI industry by tightening export controls on advanced chips and limiting American investment in Chinese tech groups.
McKinsey's stance is more cautious than that of some of its competitors. A consultant at a rival US firm said they avoided Chinese clients that had been blacklisted by Washington, but continued to undertake AI-related work for others using mainland-based teams.
McKinsey's move comes as foreign professional services firms, including law firms, consultancies and investment banks, retrench in China amid geopolitical tensions and a slowing economy.
Chinese companies are increasingly turning to cheaper local rivals, while many multinationals are withdrawing from China or greatly reducing their investment in the country.
McKinsey has reduced its headcount in mainland China, Hong Kong and Taiwan to about 1,000 from 1,500 in 2023, according to figures on its website.
Despite the pullback, McKinsey continues to position itself globally as a leader in AI transformation.
The firm has rolled out internal tools, including an AI chatbot, to help consultants automate tasks such as drafting proposals and building presentations. Its AI-focused unit, QuantumBlack, builds and deploys systems based on large language models.
Asked about the ban, McKinsey said in a statement: 'Last year, we further strengthened our client service policies in China, where today our work focuses on multinational and Chinese private sector firms.'
The firm added: 'We follow the most rigorous client selection policy in our profession, and we continue to evolve and strengthen our approach.' --Copyright The Financial Times Limited 2025
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