This study examines the impact of artificial intelligence (AI) on employment in China using panel data from 30 provinces between 2006 and 2022. It finds that AI is not merely replacing jobs but is increasing the total number of jobs on the market. AI enhances labor productivity, capital deepening, and specialized division of labor, offsetting the negative effects of robots on employment and significantly increasing the market size and production scale of manufacturing enterprises, thus creating jobs. The positive impact of AI on employment is heterogeneous, with more jobs created in labor-intensive industries and for female workers. Regions with better digital infrastructure show stronger job creation effects. Mechanism analysis reveals that the geographical agglomeration of traditional industries is evolving under digital technology, and virtual agglomeration represents a key mediating mechanism for AI to create jobs. The study alleviates concerns about AI displacing jobs, encouraging workers and policymakers to leverage AI to improve employment in the digital economy. The purpose of a country's economic development is to ensure employment. Technological progress has contributed to achieving the United Nations Sustainable Development Goals (SDG 8) of full and productive employment. Since the 18th century, the application of machines in industry has been an inevitable trend. Technological changes have deepened automation, leading to conflicts between efficiency and employment. However, technological innovation also brings "creative destruction," driving productivity and investment in intelligent equipment. AI, unlike previous mechanization, replaces not only physical labor but also cognitive abilities, potentially displacing human workers. China is in a new stage of deep integration of new technologies with the real economy, leading to new industries and employment forms. AI, based on computer science, enables systems to perceive, think, learn, and decide like humans. The popularity of AI, exemplified by ChatGPT, has sparked a wave of interest. In the context of rapid technological progress, AI is reshaping the relationship between humans and work, raising questions about its impact on employment and structural unemployment.This study examines the impact of artificial intelligence (AI) on employment in China using panel data from 30 provinces between 2006 and 2022. It finds that AI is not merely replacing jobs but is increasing the total number of jobs on the market. AI enhances labor productivity, capital deepening, and specialized division of labor, offsetting the negative effects of robots on employment and significantly increasing the market size and production scale of manufacturing enterprises, thus creating jobs. The positive impact of AI on employment is heterogeneous, with more jobs created in labor-intensive industries and for female workers. Regions with better digital infrastructure show stronger job creation effects. Mechanism analysis reveals that the geographical agglomeration of traditional industries is evolving under digital technology, and virtual agglomeration represents a key mediating mechanism for AI to create jobs. The study alleviates concerns about AI displacing jobs, encouraging workers and policymakers to leverage AI to improve employment in the digital economy. The purpose of a country's economic development is to ensure employment. Technological progress has contributed to achieving the United Nations Sustainable Development Goals (SDG 8) of full and productive employment. Since the 18th century, the application of machines in industry has been an inevitable trend. Technological changes have deepened automation, leading to conflicts between efficiency and employment. However, technological innovation also brings "creative destruction," driving productivity and investment in intelligent equipment. AI, unlike previous mechanization, replaces not only physical labor but also cognitive abilities, potentially displacing human workers. China is in a new stage of deep integration of new technologies with the real economy, leading to new industries and employment forms. AI, based on computer science, enables systems to perceive, think, learn, and decide like humans. The popularity of AI, exemplified by ChatGPT, has sparked a wave of interest. In the context of rapid technological progress, AI is reshaping the relationship between humans and work, raising questions about its impact on employment and structural unemployment.