Policy looks to regulate data usage

Creation of basic systems to boost nation's digital sector, economy

China's latest measures to create basic systems for data governance and put data to better use will invigorate the digital sector, empower the real economy and allow the public to benefit more from digital development, officials and experts said.

A policy document released on Dec 19 by the Central Committee of the Communist Party of China and the State Council, or the Cabinet, laid out steps for the development of the systems, which are key elements in the growth of the digital economy.

The effort includes the development of a data ownership system, a circulation and trading system and an income distribution system.

An official at the National Development and Reform Commission said that the latest measures are intended to promote the lawful and efficient use of data to empower the real economy and enable people to share the dividends from the growth of the digital economy.

The new measures will help the country respond to the global technological revolution and industrial transformation and better compete internationally, the official said.

Key measures also include lowering the threshold for market players to gain access to data while bolstering the protection of personal information, and establishing a system for identifying the rights of individuals and companies in the production, transfer and use of data.

China will develop an authorization mechanism for the use of personal data, including taking steps to standardize the use of this information by businesses and prevent excessive collection of it.

Ouyang Rihui, a professor of digital economics at the Chinese Internet Economy Research Institute at the Central University of Finance and Economics, said data is the core element for the growth of the digital economy, and that the latest policy document has laid the groundwork for making it a key factor in digital growth.

He explained that the measures will help transform data into resources for development and prepare for its alignment with the market.

Crucially, the document aims to balance the protection of personal information while also enabling its exploration and use, he said.

"It is important the country follow a path that suits its conditions," Ouyang said. "While effective measures must be put in place to prevent and diffuse risks from data usage, an effective institutional arrangement must be laid out to ensure proper distribution of benefits so that owners of the information are willing to share their data."

Wang Yi, a law professor and vice-president of the Renmin University of China, said the latest measures seek to establish a sound data ownership system, clarify the rights of the various parties involved and stabilize market expectations.

He noted that the policy introduced a creative solution for the ownership of data resources, the right to use and process data and the right to manage it, allowing various parties to share usage rights and reap the benefits of data resources.

"The system will adequately guarantee the interests of participants in data-related activities, spur their enthusiasm and invigorate the creation of value," Wang said.

The policy pledged to promote the efficient use and circulation of public, personal and corporate data per regulations and improve governance over data resources.

The government will coordinate efforts to develop efficient, standardized venues for data trading and establish a unified set of systems for trading and security as well as infrastructure facilities for data circulation.

Li Xiaodong, a researcher with the Institute of Computing Technology, at the Chinese Academy of Sciences, said the document guarantees that market players are entitled to benefit from their input to explore the value of data, a move that will encourage innovation in the sector.

The new measures have also clearly defined the responsibility of businesses in terms of data governance and mapped out the boundaries for government supervision, he said, adding that the national data infrastructure will be improved with the enforcement of the measures.

The new policy requires businesses to adhere to the Antitrust Law and other regulations and refrain from leveraging their strengths in data or algorithms to limit or restrict competition.

It also highlighted the need to develop a system that ensures the unimpeded flow of data across the border in a secure and lawful manner.

China will move forward with infrastructure development for cross-border digital trade, and will play an active role in the establishment of international standards and rules on data flow, security, certification and evaluation, as well as digital currencies, the document said.

It pledged to promote the orderly two-way cross-border flow of data by taking steps such as encouraging cooperation between Chinese and foreign companies and organizations and supporting foreign investors' efforts to enter sectors that have been opened up.

It also highlighted the need to conduct national security reviews of activities such as data processing, cross-border data flow and mergers and acquisitions made by foreign investors.

China will oppose data hegemony and protectionism, and will come up with effective responses to long-arm jurisdiction exercised by some countries, the document said.

Yang Qiang, head of the computer science and engineering department at the Hong Kong University of Science and Technology, wrote in a research paper that China has maintained an edge in the creation of standards for cross-border data flow due to its leading technologies in data security and privacy protection, powerful computing foundation and mammoth digital economy.

Contributing to the establishment of rules and standards on digital technologies will enhance China's power of discourse in digital trade, strengthen its independent bilateral and multilateral partnerships and ensure its interests in the global income distribution process, Yang said.

He said an international market featuring fair competition fits fundamental global interests, and that absolute data protectionism was the wrong option.

For China, encouraging foreign businesses to engage in data services will enable them to further explore the value of sharing data, allowing them to play an active role in sectors that have been opened up and promote the development of international rules to ensure fair competition, he added.