ChinaTech #10 Push for a Data Economy
... and experiments with implications for global norms
This new segment by Shobhankita Reddy is your go-to newsletter for updates and perspectives on China’s tech ecosystem. This edition explores the Chinese government’s recent policy push aimed at developing its data economy.
A recent MERICS brief sheds light on the flurry of policy activity over the past few months in China’s data sector.
These involve multiple governmental departments and include -
.. opinions on utilizing enterprise data resources, a pilot program for the whole-process management of data assets, opinions on the development of the data-annotation industry, and guidelines for the construction of a national data infrastructure.
Key aspects include -
Building a digital economy and accelerating the construction of a digital China
Achieving an average annual growth rate in the data industry of more than 15 per cent by 2029
Cultivating "a number of" internationally competitive data companies by 2029
Promoting the circulation and trading of data, for example, through data exchanges and third party-platforms
As this article puts it,
China has lots of data.
The world's largest population of internet users generates vast troves of data as citizens go online to access information, buy and sell products, make payments, chat, order taxis, learn, and consume and produce entertainment. Meanwhile, the world's largest network of surveillance cameras watches their every movement, and public services are digitalizing.
Unlocking the value of all this data is a major theme in the Chinese government's digital strategy — one linked to important security, public policy and economic objectives. China's government considers data not only as a tool to cement its authoritarian rule (Hoffman 2019; Mozur, Xiao and Liu 2022), but also as an economic "factor of production" on par with land, labour, capital and technology — a foundation for national power and competitiveness (CCP Central Committee 2019; CCP Central Committee and State Council 2020).
Multiple ideas have been experimented with to "activate" data and make it useful for downstream economic applications. Chinese companies are allowed to register data assets on their balance sheets as inventory or intangible assets, the first such regulation in the world, with the Ministry of Finance clarifying the accounting regulations on this.
Also, a dedicated National Data Administration (NDA), under the National Development and Reform Commission, was officially inaugurated in October 2023. It was created to oversee the coordination and development of data resources, promote China's digital economy, and construct a "Digital China."
The Cyberspace Administration of China (CAC) is the most authoritative state agency primarily responsible for regulating digital media, the Internet, and cybersecurity. However,
It has already been overloaded with multiple tasks related to its "security" focus and has limited capacity to engage in the promotion of China's data and digital economy.
The establishment of the NDA demonstrates a shift from an earlier emphasis on security issues to a dual stress on both security and economic development in China's data governance. (Source)
The Chinese government has been promoting data exchanges (marketplaces) for the efficient trading of data, algorithms, compute and such resources as well. The first of these was the Guiyang Global Big Data Exchange in 2015, following the State Council's Outline of National Action for Facilitating Big Data Industry Development. Other exchanges in Shenzhen and Shanghai are also note-worthy, the latter recently teaming up with an international vendor to meet Chinese companies' demand for global data as they expand overseas.
Many of these exchanges in their initial years saw mellow trading volumes -
Issues around data ownership and pricing, as well as a persistent lack of trust, continue to disincentivize companies from trading their data in the market, leading to a supply bottleneck.
This led the government to step in with tighter regulatory oversight at each step of the data value chain, including registration of the data asset/ product, data quality, legal compliance, and pricing, among others.
This saw some success but was still primarily state-led, with little activity from private players.
This makes it challenging to determine the extent to which participation in the ecosystem is even voluntary.
The recent policy initiatives aimed at promoting and developing the data economy across various segments of the data value chain indicate that the central government is committed to addressing existing limitations. These experiments — both in their conceptualization and implementation, regardless of their success — have valuable lessons for policymakers worldwide.