Factbox: China moves towards digital economy dream with national data bureau

Digital China Holdings

08/03/2023 08:41

By Josh Ye and Julie Zhu
       HONG KONG, March 8 (Reuters) - China has announced plans
for a national data bureau, describing it as part of an effort
to coordinate data resources in the country and to achieve a
vision of "digital China" conceived by President Xi Jinping. 
    Its formation, which is part of a sweeping government
reshuffle, is set to be voted by on China's legislature on
Friday.
    Here's what we know, and don't know about the new bureau:
    
    WHAT IS THE BUREAU IS BEING SET UP TO SUPPORT?
    Xi's vision for a "digital China" aims to see the country
populated by smart, internet-connected cities and data treated
alongside labour and capital as a key factor to drive the
economy and help China compete more effectively globally. 
    While not as well known internationally as his other
initiatives such as the Belt and Road, the topic of a digital
economy has repeatedly come up during meetings of Chinese
leaders over the past decade. Some local media reports say Xi
first mentioned the term in 2012. 
    Since 2014, several cities including Shenzhen and Shanghai
have launched data exchanges that allow information sets from
coal trading volumes to company credit ratings to be traded. 
    Such efforts, however, have been considered fragmented and
talk of a more unified approach has emerged in recent months. 
    In December, China's top leadership published an outline of
how China should develop basic data systems and utilize the
country's data resources. Last week, they unveiled a new plan
that aims for the country to lead digital development globally
by 2035. 
    "In retrospect, recent developments were clearly building
toward the inauguration of this new agency," analysts at Trivium
China said in a note on Tuesday.  
    
    WHAT MAY THE BUREAU BE RESPONSIBLE FOR?
    The plan submitted to parliament was scant on detail, saying
the bureau would be responsible for "coordinating the
integration, sharing, development and application of data
resource" and promoting the construction of smart cities. 
    One person familiar with China's regulatory thinking said
the new bureau will create rules for data property rights,
circulation, pricing and trading, an effort that could benefit
data-rich companies, at least financially, such as the big
internet giants. 
    Citic Securities analysts said in a note on Tuesday they
believed the bureau's formation meant that "China will
accelerate the development of the data factor market within the
country."
    Areas to watch include big data infrastructure, data
processing, the digitization of government data as well as data
encryption, they added.     
    
    WILL THE BUREAU HAVE REGULATORY POWER?
    Analysts say no, upon first read. The bureau will be run by
the state planner, the National Development and Reform
Commission (NDRC), rather than the country's internet watchdog,
the Cyberspace Administration of China. 
    "The new agency seems to be more on the 'data productivity'
side, to make and develop data as a strategic strength for
China," said Michael Tan, a Shanghai-based partner of law firm
Taylor Wessing. "That also explains why CAC remains and this new
agency belongs to NDRC." 
    The CAC has in the past six years rolled out new
cybersecurity, data and privacy laws that govern how
organizations should handle and transfer data domestically and
abroad. 
    
    ARE OTHER COUNTRIES DOING ANYTHING SIMILAR?
    Last year, the World Economic Forum said that India,
Colombia and Japan were exploring similar data exchange concepts
but not much detail has been available. 
    Europe has raised the issue of where data is hosted and
processed as a matter both of sovereignty and security and in
2020 launched cloud computing platform Gaia-X as an alternative
to U.S. cloud computing providers. 

 (Reporting by Josh Ye and Julie Zhu in Hong Kong; Additional
reporting by Josh Horwitz in Shanghai; Editing by Brenda Goh and
Christian Schmollinger)
 ((Josh.Ye@thomsonreuters.com;))