Data as a Commodity: Shenzhen Data Exchange Launches Trading
Data is now being traded as a commodity in China. The Shenzhen Data Exchange, a state-run data exchange, launched in November with an inaugural ceremony and exhibition in Shenzhen.
Official trading began after a year-long trial period that saw 415 trade deals for a total trading volume of 1.1 billion yuan ($150 million USD), as reported by the South China Morning Post.
So far, there are 484 companies registered on the exchange, including 98 data providers, 91 data brokers, and 295 current and prospective data buyers, according to SCMP. Shenzhen is southern China’s technology hub and is home to cloud providers Huawei and Tencent.
Since April 2020, China has regarded data as a production factor, or an economic building block in the same vein as land, capital, and labor. As of August, over 40 data exchanges have emerged in China or are in the works, according to China’s State Information Centre. Other cities are getting in on the action: Shanghai launched a data exchange last December and Guangzhou initiated its own this past September, where trading volume reportedly surpassed 200 million yuan earlier this month.
One company listing data on the exchange is the state-run China Southern Power Grid. The company has already been selling the credit data of companies based on electricity use to financial industry clients and will now list this data for sale on the exchange. Another data provider is Aurora Mobile, a mobile big data solutions platform based in China. In a press release, the company said it has connected its system with the trading service platform of the exchange and is readying its self-owned data products for compliance with the exchange’s standards to make them available on the platform for trading.
SCMP noted in its coverage that these data trading experiments continue despite the fact that China lacks an adequate legal framework to help resolve issues around data trading, including data ownership. A report issued this month from China’s Development and Reform Commission listed the lack of a basic governance framework for data production as a hindrance for development of China’s digital economy.
Digital economy concerns were also relayed at the World Artificial Intelligence Conference that was held in Shanghai in September. Wáng Jiàndōng, an official from the Big Data Development Department at the State Information Center, announced that China has entered the era of data trading 2.0, which he calls a “multi-level and three-dimensional data trading market system and service ecosystem.” However, Wáng listed major challenges the country still faces. According to reporting from The China Project, these challenges include a lack of data coordination between levels of government, regions, and departments with no coordination mechanisms or unified data circulation rules. There is also a lack of clear data property rights, pricing mechanisms, circulation mechanisms, and data allocation and income distribution mechanisms. Connectivity mechanisms for data trading venues and third-party service ecosystems are also deficient, which complicates data registration, compliance, data brokerage, security audits, asset evaluation, and dispute arbitration. Finally, the intricate international data environment with its wide range of data governance and protection regulations can make adherence to security compliance quite tricky.
SCMP reported that Li Hongguang, chairman of the Shenzhen Data Exchange, said in an interview with a local media outlet that data trading faces problems such as the lack of high-quality data and a profit distribution mechanism, so most companies are still taking a wait-and-see approach.
Still, Li is confident that Shenzhen’s already robust digital economy will strengthen its data exchange, and the exchange aims to attain a trading volume of 10 billion yuan (about 1.4 billion USD) by 2025.
China Passes Strict New Data Privacy Law
Security, Privacy, and Governance at the Data Crossroads in ‘22
How Unified Data Access Governance Will Determine the Winners and Losers in the New Data Economy