The CCP is also well aware that it's facing a dramatic demographic contraction so they better prepare for that.

Labor costs are lower, but rising, and already high enough that automation can be appealing.

The Chinese government is also pretty good at finding things for people to do, so I doubt that's a factor. Go to any big park in a city and see how many people are sweeping up leaves, or guarding a building/area that isn't particularly secure.