Email of the day on China's data security law:
Comment of the Day

July 20 2021

Commentary by Eoin Treacy

Email of the day on China's data security law:

What are your thoughts on the Data Security Law to be rolled out in Sept.? Yet another tool the Chinese government is using to control their equity markets?

Eoin Treacy's view

Thank you for the attached article and this topic question. Here is a section from the Reuters article

"They're playing four-way chess here," said Samm Sacks, a cyber policy fellow at think tank New America.

"It's not just a national security policy, it's a much more deliberate plan asking 'how do we really tap into the value that flows from data from an economic standpoint?'"

A digital economy development plan released by the State Council in March lays out a five-part plan for "experimental stage data markets" and calls for authorities to "implement and strengthen the economic supervision" of internet platforms.

The powerhouse province of Guangdong last week announced plans to launch one such platform by year-end to trade and oversee the movement of data, including a customs hub for international transfers.

In the West we tend to think of individual personal and health data as the property of the individual. We share our information with service providers. In return they make products available that we place value in. Platform companies have monetised individual data points to create vast databases of files which are primarily used to sell advertising. China sees the potential but wants to ensure the market grows within arms’ reach of the Party.

The data marketplace will wrest control of data from companies and place it in a central repository. That gives the government access to everything there is to know about an individual. The notion of privacy has been confined to the trash. In building national champions in data analytics, deep learning and autonomy, China is providing a massive support by making the same data available to everyone. Companies will not be allowed to compete based on the value of their databases but only on the success of their applications.

This means it is a race to the bottom since any competitor can build a copycat app. The ultimate aim is to win in autonomy. That’s all they are interested in. Announcing the Data Security Law less than a year after Tesla was incentivised to open a Chinese factory is no coincidence.

The Security Law and its implications for the data marketplace and rapacious competition mean the Party sees the success of existing stocks are secondary to the geopolitical imperative of becoming the dominant player in electric vehicles and autonomy. Considering the volume of money being thrown at the challenge, it is quite likely China will be among the first to develop level 5 autonomy. That will raise the question of whether the data marketplace solution is the best way to go. Privacy is experiencing the greatest threat in the history of mankind as a result.

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