How Data is Reshaping Governance in China
This piece will discuss the broad incentives and interests that drive Beijing’s decision making in relation to big-data. It will begin by touching on the significance of data in transforming the future of governance, before delving into 3 key tenets of individual, business and government data in China.
What is the significance of deploying big-data in governing China?
At the most basic level, the help of big data can strengthen Xi Jinping’s “top-level design”, that is, central coordination to promote technological innovation, economic efficiency and political stability.
China’s leaders are already widely implementing big data tools to compensate for China’s ‘state-directed capitalism’ model and state-owned enterprises that are not using resources efficiently. Today, increasing numbers of Chinese economists and technical experts believe that big data will make up for the shortcomings of a system that risks market failure by juggling both market competition and political clout.
China’s economists and regulators also believe that an array of real-time data, such as currency, investment and credit flows, will be able to rapidly guide and fine-tune the market, as well as curb financial risks such as real estate or stock market bubbles. In fact, this could create a more intelligent resource allocation system than market-based pricing mechanisms.
How data will reshape China’s approach to governance in the upcoming decade — key questions and challenges:
- How the ubiqtuiy of data will challenge existing governing concepts and strategic frameworks.
- A remodelling of governance? Government-as-a-service (GaaS)?
- The construction of a new public order system and customs.
- Reconstruction of legal and policy processes using data platforms.
- New governance ‘subjects and objects’. New governance mechanisms, tools and means.
- A new round of “reform dividend”, “data dividend” that could accelerate reform and progress.
What are the basic drivers behind Beijing’s policies towards individual and business data?
“The government should play its due role in tackling the ‘isolated islands of information’ and unconnected ‘data chimneys’, promoting the sharing of government information, improving government efficiency, and making it more convenient for enterprises and the general public to do business. All data, except those involving national security, trade secrets and personal privacy, should be open to the public.”
“政府要发挥应有作用，破解一个个互不相连的“信息孤岛”和“数据烟囱”，推动政府信息共享，提升政府效能，让企业和群众办事创业更方便。除涉及国家安全、商业秘密、个人隐私外，都应向社会开放”
— Premier Li Keqiang at China Big Data Industry Expo, Guiyang, May 2016.
This comment made by Chinese Premier Li Keqiang at a Big Data Industry Expo in 2016 contains several strands of thinking that form the basis of data governance in China today, namely:
1) National security comes above all else — including trade secrets and personal privacy. This security-centered approach has long been the hallmark of the Chinese government’s policy towards data.
2) The prioritisation of national security is at odds with the government’s eagerness to reap the full rewards of China’s immense data troves. Liberalisation of data flows can help transform China’s economy, drive economic growth and stimulate innovation, but at a cost to political stability.
3）The centralised nature of data flows in China. Li Keqiang also commented in May 2016 at a State Council meeting that the government (at all levels) had control of 80% of data in China — well before the strict data regulations imposed in the 2017 Cybersecurity Law — indicative of the monopoly the government has over domestic data flows.
These three points will be discussed in more detail below.
1. Ultimately, national security is paramount.
First, is the notion of how free flow of data to these actors not only opens up China’s citizens to the possibility to be influence by foreign appropriation. China perceives data as an essential resource that can be appropriated by foreign powers.
First, so-called ‘net states’ — digital, non-state actors, such as Facebook, Google and Amazon — have the potential to exert more influence than most governments without being bound by borders. Liberalising data flows opens the door for such companies to acquire vast amounts of data on and leverage or influence Chinese citizens.
Second, centres on the relationship between data and the economy. Liberalised data = liberalised economy = less ability to investigate and intervene in the market when needed. Liberalised data therefore undermines economic stability and thus the political legitimacy Xi Jinping and the Communist Party derive from this stability.
2. Security vs liberalised data-driven innovation
In the 4 years since Li Keqiang made his remark at the Big Data Industry Expo, the issue of balancing protectionism and opening-up has surfaced again and again. Most recently, coming to the fore in the 2020 revisions to the 2017 Cybersecurity Law. As part of these revisions, the original law was tweaked to promote the creation of regulated markets for data as a new commodity. Data trading platforms were previously seen as a ‘wild west’ market, incompatible with protectionist security standards. Now, while the gradual commercialisation of data may entail risks to Beijing’s control over data flows, the trade-off is a source of long-term economic growth and a domestic (and controllable) platform.
The new Cybersecurity Law is the first national law that recognises data transaction markets (数据交易市场), granting legitimacy to the notion of data as a trading commodity. The revisions also included an outline for data classification, providing a framework for the commercialisation of data which offers much needed clarity to help players participate in the market. Ultimately, we can expect further opening-up of data as a commodity as and when the industry develops.
3. Data Centralisation
The government’s monopoly over data flows (including requiring all firms to store their data inside of China) also guards the privacy of citizens — at least to commercial exploitation and foreign influence. Implementing these rules has made China one the strongest protectors of privacy in the world.
Possession of much of the data produced by the 1.6 billion mobile phone users in China is centralised among a handful of China’s biggest tech players, namely Tencent, Alibaba and Baidu. This dynamic only serves to support further centralisation and state intervention in data flows.
