Published August 9, 2021
China’s evolving regulatory approach to data is in part aimed at using the resource to supercharge the country’s digital economy, according to Kendra Schaefer, Partner, Tech Advisory at Trivium - China.
Speaking on an ANZ customer call, Schaefer said China’s well-published changing attitudes to tech companies within its borders highlighted a difference in strategy with data than seen elsewhere.
“When we look at data in the West, we often look at it from just the privacy or security perspective,” he said. “How do we protect individual data? How do we protect corporate data?”
“China's taking an economic look at data. How do you use data as a strategic economic resource? That's the key question.”
The shifting regulatory approach has taken the form of new rules and standards around data, tech and how companies in the rapidly growing digital sector operate, Schaefer said. One of those aims to split data into secure and economically actionable bundles.
“What policymakers are trying to do is separate out which data needs to be secured, and then [ask], what do we do with the data that doesn't need to be secure?” she said. “And how do we use that as seed capital for the digital economy?”
“How do you pump it back into companies, back into algorithms? How do you really leverage it? How do you get it moving around and circulating?”
Schaefer made the comments on a call with Richard Yetsenga, Chief Economist and Raymond Yeung, Chief Economist, Greater China at ANZ.
Yeung said a key motivation of China’s push is the hope a strong digital economy can help arrest its declining rate of growth.
“Digitisation and continuous technology infusion is still very, very important” to China’s economy, he said.
Changes to regulations around tech and data are a sign China’s leadership is “still trying to find a balance and consider how [tech and data] fits into the overall growth model of China.”
Yetsenga said China’s tech sector added “nearly one per cent of GDP growth in China” in 2018, showing there was “no doubt” the industry was critically important to China’s economy. This is now an issue as new rules limit the scope of the sector, he said.
“If there's going to be a different constraint on the tech sector now, where the growth we saw before, we just can't see any more, then the focus switches back to manufacturing and consumption as the drivers of growth,” Yetsenga said. “And I think in China, both those have some pretty serious structural headwinds.”
Schaefer said the regulatory rethink showed China was “laying the foundation of its data governance regime” for generations to come. She said the new expectations of the sector would “dramatically change the way tech companies are required to operate.”
“[Chinese] tech companies are going to be subject to a series of very big, very foundational, very transformative laws,” Schaefer said. “And they’ll have to figure out how to adjust.”
“Over the last five years, China has really solidified its strategy on how it wants to lay the groundwork to support the digital economy for the next half a century.”
“They are thinking what are we doing 10 years from now, 20 years from now, 30 years from now?”
Shane White is Content Manager at ANZ institutional
Surge in export growth in the second half could partly offset the weakness in mainland China's domestic demand.
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