Data is the oil of the twenty-first century, an inexhaustible resource that will power AI algorithms, economic strength, and national might. All of us are the source of this data: our medical records and genetic sequences, our internet behaviours, our companies’ supply chain movements, and the terabytes of pictures consumed by smartphones, drones, and self-driving cars. To obtain financial, technological, and military advantages in the twenty-first century, it will be necessary to safeguard and harness this data. China is currently winning, while the West is barely involved.
Mr Xi has been hard at work building the Chinese Communist Party the world’s most powerful data broker through a latticework of new laws and regulations. How does Beijing accomplish this? By isolating Chinese data from the rest of the world, gaining additional extraterritorial control over global data flows, and putting foreign companies doing business in China in legal limbo — all while consuming data from other nations through legal and illegal means. Mr Xi understands that securing solely Chinese data, which represents the patterns and behaviour of 1.4 billion people, would stymie Beijing’s competitors in the race for global economic supremacy.
“The huge ocean of data, like oil resources during industrialization, contains immense productive potential and opportunities,” Mr Xi remarked in 2013, shortly after assuming the presidency in Beijing. Whoever controls big data technology will have the upper hand in terms of development resources.” Since then, Beijing has been putting in place the infrastructure to ensure that massive data collections suit the strategic goals of the Chinese Communist Party. In 2017, the party asserted its capacity to obtain access to private data on Chinese networks, whether in China or affiliated with Chinese corporations such as Huawei overseas, through a series of laws.
Now, Beijing has discreetly passed a new set of rules — the Data Security Law in September, followed by the Personal Information Protection Law in November — that go even farther, requiring not only access to private data but also effective control over it. This has a significant influence on international companies doing business in China. Beijing now seeks control over whether they can send Chinese data to their own headquarters, a company facility in, say, California, or a foreign government that has made a law enforcement or regulatory request.
Beijing’s new moves are in addition to its long-running efforts to buy, steal, and otherwise obtain data from foreign sources around the world. Beijing has hacked into the databases of global corporations. It organises “talent recruitment” programmes at universities and businesses throughout the world. It acquires overseas firms, such as an Italian drone manufacturer. It invests in open overseas marketplaces like Silicon Valley to fund its own data-driven start-ups. The strategy is blatantly nonreciprocal. It relies on international data while denying foreigners access to Chinese data – and appears to presume that foreign governments would remain unresponsive.
The good news is that if democratic countries get their act together, they may be in a better position than Beijing, which is obstructing its own advancement due to a paranoid attitude. Mr Xi has been cracking down on private Chinese digital titans like Alibaba and Tencent in recent months, requiring them to hand up their data troves to state-controlled third parties. This crackdown, which resulted in the loss of over $1 trillion in market value, would make these companies less inventive because they no longer have control over their data. Democratic allies must work together to increase data sharing while limiting data flows to China. Former Japanese Prime Minister Shinzo Abe presented a blueprint. This concept, dubbed Data Free Flow With Trust, should be adopted as a policy.