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China is turning inwards for improving its technology prowess as the US tries to isolate Beijing with a raft of sanctions and export embargoes. Beijing has developed China data exchanges that will allow the trading of big data like commodities.
At the beginning of 2022, China released its ‘14th Five-Year Plan for the Development of Digital Economy’ under which the country is looking to digitalize everything from industrial production to agriculture to municipal governance. A key highlight is China’s treatment of data as a core “factor of production”.
As per a report by the China Academy of Information and Communications Technology (CAICT), China’s digital economy hit $7.1 tn in 2021, only second to the US. Separately, the share of the digital economy as a part of national GDP reached 39.8%, a nominal growth of 16.2% year-on-year.
Launch of China data exchanges
On November 15, China officially launched the Shenzhen Data Exchange after nearly a year of trials. The platform allows companies to buy and sell data just like commodities. During the trial period, the data trading platform handled 415 deals with a total trading volume of 1.1 bn yuan ($150 m).
At present, the Shenzhen Data Exchange has a total of 448 companies registered on it, including 98 data providers, 91 data brokers, and 295 data buyers.
The data trading platform in Shenzhen is not the first one to be set up, and similar exchanges are already operational across China on a local and state level. Back in September, an official from the Big Data Development Department at the State Information Centre announced that the era of data trading 2.0 had arrived. Specifically, the terminology refers to a “multi-level and three-dimensional data trading market system and service ecosystem”.
As per a report published by Chinese media, China’s data generation is likely to reach 174 zettabytes by 2025 (1 zettabyte equals 1 billion terabytes).
Beijing intends to capitalize on this vast amount of data by initiating of a trading market which facilitates information sharing, thus increasing the speed of technology development. For example, the big data of a large corporate can be bought by a start-up which can propel its business.
Domestic media has counted at least 46 such China data exchanges across the country as of August 2022. Research done by the National School of Development of Peking University found three main aspects of data exchanges — large data output but a small trading market, insufficient on-site transactions, and the large scale of black-market transactions.
While the issues mentioned above pertain to the functioning of data exchanges, the bigger questions are — Who owns the data? Who provides this data? How does this impact private companies?
When it comes to ownership, the data being sold can range from photos of people for AI modelling to healthcare data from drug development. There is no clarity on what constitutes ‘data’ and ‘personal information’. Several tech companies which collect data from their customers are already selling it to other companies, but how can China data exchanges prove beneficial for them?
Another question is how companies will decide on the data for sale as it may constitute sensitive details. Last year, China passed the Data Security Law to supervise the creation, use, storage, transfer and exploitation of data. This is part of the Cybersecurity Law and National Intelligence Law.
Meanwhile, the large number of data exchanges across the country are on a local level but there is no national entity in place. This could potentially hinder the objective of data sharing. Chinese analysts Li Chunguang and Wang Shuo in a report published by domestic media say that data is scattered across the country and unevenly distributed, while the local governments lack relevant talent.
The chairman of Shenzhen Data Exchange acknowledged some of these issues with China data exchanges, including the lack of high-quality data and profit distribution mechanism.
