The vice governor of Hainan isn’t normally the center of attention at high-profile political meetings like this month’s ‘Two Sessions’ gathering in Beijing. But Xie Jing attempted to seize the national spotlight last week when he submitted an ambitious proposal to turn the island province into the country’s premier hub for cross-border data flows.
Hainan, which has already started construction on China’s first underwater data center, isn’t the only locality vying for a piece of China’s big data pie. The largely rural Guizhou Province, home to over two dozen data centers, has long claimed the title of China’s ‘Big Data Valley.’ Tibet touts the fact that it hosts the world’s highest-altitude data center. And in recent months major cities like Beijing, Shenzhen and Shanghai have all announced new plans to invest in expanding big data infrastructure.
The nationwide focus on big data crystallized this week as China’s government launched a new central bureau to oversee and develop the country’s large swathes of data across public and private spheres. “In today’s society, information resources and the digital economy serve foundational functions in economic and social development,” the proposal read.
Beijing leaders see data as a panacea for governance challenges, especially in terms of preserving the power of the party state.
Rebecca Arcesati, a tech analyst at MERICS
The administration’s creation, part of a sweeping overhaul of state regulators in areas including tech, finance and security, underscores the priority China’s government is placing on data — the bedrock of several cutting-edge industries where the country is seeking an edge, from artificial intelligence to autonomous vehicles.
Analysts say the new regulator’s existence symbolizes the extent to which Beijing’s approach differs from rival economies, as it seeks both to control big data and promote it as an engine of economic growth. The move could also exacerbate concerns among U.S. lawmakers that China is pulling ahead in the race to exploit a vital new industrial resource.
“Beijing leaders see data as a panacea for governance challenges, especially in terms of preserving the power of the party state,” says Rebecca Arcesati, a tech analyst at the Mercator Institute for China Studies. “This is an idea that sets China apart from both the EU and the U.S. in terms of how leaders are thinking about leveraging and harnessing data.”
DIGITAL CHINA
Xi Jinping’s interest in a digitized national economy can be traced back to his time as governor of Fujian Province, where he pioneered an initiative called ‘Digital Fujian.’ Shortly after becoming president 12 years later, Xi launched ‘Digital China’, a plan aimed at digitally transforming China’s economy and governance.
“The vast ocean of data, just like oil resources during industrialization, contains immense productive power and opportunities,” Xi said in a speech in 2013. “Whoever controls big data technologies will control the resources for development and have the upper hand.”
A CGTN video on the Data Security Law and its wider impact, September 1, 2021.
The government initially focused on data security, passing a cybersecurity law in 2017 that allows the state to conduct at-will security checks on companies. Beijing also began to weaponize data for its own security purposes, deploying facial recognition cameras, surveillance drones, and artificial intelligence to surveil suspected criminals and minority populations.
Exerting control over data was a central component of Beijing’s crackdown on the country’s tech sector in recent years. In 2021, the government introduced the Data Security Law, which is focused on regulating how data is stored and handled, and the Personal Information Protection Law, aimed at protecting individual data rights. That year, Beijing imposed a heavy fine on the country’s ride-hailing app Didi Chuxing for data security violations.
Last September, Chinese regulators also introduced stiffer requirements for Chinese and multinational firms operating in China. Any firm that has more than a million users, or has collected data on more than 100,000 people in China, now needs Beijing’s approval before sending data abroad. Amazon, Samsung, and JP Morgan are among the firms still awaiting Beijing’s approval to do so.
“Under Xi, the Party perceived that too much control over data, and too many benefits from data use, accrue to private entities,” says MERICS’s Arcesati. “The idea in Beijing is that these sorts of advantages and benefits from data need to accrue to the collective. In China’s case, the government serves as that intermediary.”
For Beijing, protecting China’s data is also a way to buttress its role in developing new industries. In 2020, the Communist party elevated ‘data’ to become the fifth factor of production under its official doctrine, alongside land, labor, capital, and technology. Tech experts have long viewed China, with its enormous population, as holding a huge potential advantage in areas like artificial intelligence, where greater volumes of data can train better algorithms.
“The earlier Chinese perspective on data was very security focused,” says Graham Webster, editor-in-chief of Stanford University’s DigiChina Project. “The 2020 shift means the Chinese government has explicitly been seeking a balance between security, and unlocking the economic and social potential of data.”
Beijing released an update to Xi’s Digital China strategy a week before the opening of this month’s ‘Two Sessions’ meeting, outlining a goal to build infrastructure and unleash data resources as a means to fully digitize China’s economy. The new data administration is set to be the primary engine driving this vision.
Critics of China’s approach argue the government’s heavy-handed regulatory intervention and security-driven approach has stifled the sort of private sector innovation needed to develop industries that rely on data. Others point to nuances to the picture of a powerful Chinese state wresting control over data from private sector interests.
“In the U.S., there is an assumption that the Chinese Communist Party can require everyone to share their data with them. But there’s no law that explicitly says that in China,” says Jamie P. Horsley, senior fellow at the Paul Tsai China Center at Yale Law School. “Data is a valuable asset from the government’s point of view and the company’s point of view. So it’s much more of a negotiation and trying to figure out how they can get companies to share their data with the government and each other.”
DATA WARS
In Washington D.C., however, there is already a widespread assumption that Beijing exerts excessive power over data. This week, a bipartisan group of U.S. senators unveiled a bill to give the U.S. government more powers to ban the online video app TikTok, asserting that Beijing could force its Chinese parent, Bytedance, to hand over its vast collection of U.S. user information.
TikTok has laid out a $1.5 billion ‘Project Texas’ plan in an attempt to quell such data security concerns. But news that Beijing is seeking to enhance its data governance capabilities further may not help the wildly popular app’s case.
“TikTok is the last remaining big Chinese tech platform with any hope of working in the U.S. So what did China’s government come up with? More centralization in data governance,” says Karim Farhat, a research scientist at the Georgia Institute of Technology.
Hawkish figures such as former deputy national security advisor Matthew Pottinger have already sounded the alarm. “If Washington and its allies don’t organize a strong response [to China’s big data strategy], Mr. Xi will succeed in commanding the heights of future global power,” he wrote in a 2021 op-ed for The New York Times.
Other nations are already looking to China’s data governance methods as an alternative to American and European standards.
The 21st century economic competition is going to be built around data management and data availability, data utilization, and data processing. China’s new national data bureau should be a wake-up call for the U.S.
Denis Simon, a professor at the University of North Carolina Chapel Hill
“Countries in Southeast Asia are trying to develop their own digital economies and looking at China for a working model,” says Ngor Luong, a research analyst at the Center for Security and Emerging Technologies at Georgetown University. “This is a space that China sees as a way to reshape the conversation around data governance.”
Denis Simon, a business and technology professor at the University of North Carolina Chapel Hill, believes that the U.S. needs to build more sophisticated data governance mechanisms in order to compete with China in the long term.
“The 21st century economic competition is going to be built around data management and data availability, data utilization, and data processing,” he says. “China’s new national data bureau should be a wake-up call for the U.S.”
Grady McGregor is a staff writer for The Wire China based in Washington, D.C. He was previously a staff writer at Fortune Magazine in Hong Kong, writing features on business, tech, and all things related to China. Before that, he had stints as a journalist and editor in Jordan, Lebanon, and North Dakota.
