On 19 December 2022, the Central Committee of the Communist Party of China and the State Council issued the Guidelines on Building Basic Data Systems to Better Leverage the Role of Data as a Production Factor (hereinafter referred to as the Guidelines). With the exponential growth of data and its value, the release of this document is a signal of China’s commitment to build a system regulating the usage of data and promoting the compliance and efficient circulation of data – which in turn will have positive implications on the economy. The Guidelines focus on basic data system construction, data sharing, high-quality supply of data, data circulation, data governance, and opening-up and cooperation.
The importance of data in China has gradually evolved, from being viewed merely as a resource, then as an important asset, to a new fundamental production factor. As such, data has the unique characteristics of being intangible and non-consumable: it can be reproduced indefinitely at close-to-zero cost, posing new challenges to the traditional systems of property rights, circulation, distribution, governance and so on. Against this backdrop, it has become urgent to build production relations by establishing regulating systems reflecting the development of digital productive forces, thus unleashing the potential growth at the digital age. Specifically, the Guidelines point out the establishment of four basic systems: data property rights system, data circulation and trading system, income distribution system, and governance system.
According to the Guidelines, the data property rights system in particular will highlight the right to use and circulation in a bid to further stimulate data usage and circulation, which accounts for a large share of data-related activities. Specifically, the data property rights are separated into data resources possession rights, data processing rights, and management rights for data-related product. Furthermore, the registration of the property right system will apply to the right to use management as well. The registration mechanism related to data can be traced back to the year 2002 when the government information resources catalogue system started to be built. With the information and communication technology advancement and industrial development, however, the share of government data resources was quickly outnumbered by the industrial ones – which now account for 80% of total amount of data resources. It is expected that the new registration data system covering data from both the government and the industry is more suitable for today’s digital economy.
The circulation and trading system will be constructed from four perspectives, including rules, market, ecology, and cross-border data transfer. Regarding the last point, the Guidelines require the government to proactively participate in international and regional rulemaking for cross border data transfer, as well as to promote bilateral or multilateral negotiation in this field. Currently, cross-border data transfer management is built on the overarching legal framework of the Cybersecurity Law (2016), the Data Security Law (2021) and the Personal Information Protection Law (2021). As supporting measures, government authorities also released the Measures for the Security Assessment of Cross-border Data Transfer, the Certification Requirements for Cross-border Transfer of Personal Information, and the Standard Contract Provisions for Cross-border Transfers of Personal Information (draft for comments). The three main documents define the current rule system for cross-border data transfer, with the aim of improving the efficiency and ensure more effective protection of cross-border data transfer, while guaranteeing national security via either safety assessment (mandatory in some cases), certification schemes or standard contract.
The income distribution system is set to promote efficiency and fair competition, along different stages of distribution. The initial distribution stage shall follow the principle of “who invests and contributes decides who benefits”, that is, the distribution income generated from data shall prioritize creators of data value and data usage value. In the secondary distribution and tertiary distribution stages, priority shall be given to the public interest and to relatively vulnerable groups so as to control the disorderly expansion of capital in the data field, as well as other risks and challenges.
The last system, namely the data governance system, shall be designed in a way that allow multiple stakeholders to participate in data management, including government, enterprises, and other relevant stakeholders. The aim is to reduce risks and foster a resilient and inclusive management environment.
To ensure the actions to be implemented, the Guidelines specify the next steps to be taken, including policy formulation, development of the data market, optimization of data-related infrastructure, strengthening of high-quality data supply, and promotion of cooperation among government departments in different regions and levels. As the application of ICT to various industries starts to prevail on design and manufacturing processes, foreign producers might largely get involved with data generation, process, and cross-border transfer. Therefore, it is strongly recommended to keep monitoring the development of relevant policies and rules, both those existing as well as those forthcoming ones in line with the requirements of the Guidelines.
