After finally getting how to circumvent the issue with incorrect difficulty setting, I was able to play a couple of games with proper serious difficulty, What I noticed however that by the time Early Modern era starts almost all AI cities are depopulated. This obviously makes the game quite pointless since 20+ pop city can quickly build/buy 6 unit stack without any issue but 0 pop city is basically done.

The problem obviously is growth/military mechanic. You need pop to build units but the higher the city population the quicker the growth is, which is not a bad thing by itself but AI does not understand this fact and builds military even when it should not, thus hampering growth which results in weak economy and military,

There are some AIs - IIRC the Brown, the Green, and the Yellow ones - that have a trait called "cruel", that is, they will spend their population into building projects whenever possible. In my past games I don't see other AIs, especially the Orange and the Black AI, had any depopulated city; in fact the Orange AI had some 20+ pop cities.

On the other hand, I was playing under the incorrect difficulty, so the above observation is probably based on the easy difficulty. Maybe under the real Serious difficulty the AIs are different.