China’s Government Data Sale Initiatives
Recently, several provincial and city data bureaus have been established. As of January 20th, data bureaus in Jiangsu Province, Sichuan Province, Shanghai City, and others including Guangdong, Hebei, Hunan, Yunnan, Qinghai, and Inner Mongolia, making a total of nine provincial-level data bureaus, have been formed. This also signifies the opening of a trillion-level data market that has been continuously active since October 25, 2023. Today, let’s discuss China’s government data sale: Are there specific examples? Is it feasible? Can it be effectively promoted?
Details and Implications of Hengyang Data Auction
The direct catalyst was an announcement on November 15, 2023, from the Hengyang City Public Resource Trading Center, which showcased the municipal government data resources and the concession rights for a smart city project, with a starting bid of 1.8 billion yuan. This sparked widespread online discussion and was seen by many as a signal of the initiation of data-driven fiscal policy. So, what was being auctioned? The answer is four characters: government information. According to an explanation reported by China Newsweek, this refers to documents, materials, charts, pictures, videos, and data—all types of information resources produced or acquired by government departments in the course of performing their duties. These are recorded and preserved in certain forms and include data directly collected by government departments or through third parties, legally authorized management, and information resources that need to rely on government information systems to fulfil duties. The ownership of this data belongs to the government, simply put, it is public data resources held by the government.
Challenges and Debates Surrounding Data Monetization in China
However, Hengyang quickly suspended the transaction. As the topic of discussion is digital finance, using Hengyang as an example raises the question of whether the 1.8 billion yuan project is overpriced. There are four main economic ledgers of local finance: general public budget revenue, government fund income, state-owned capital operation income, and social insurance fund income, with the major portion of government fund income coming from land concession revenue. According to the “Report on Hengyang City’s 2022 Municipal Final Account Draft and the Budget Execution in the First Half of 2023,” the government fund budget revenue for Hengyang in 2022 was 14.968 billion yuan, with land concession revenue accounting for 14.445 billion yuan. This revenue experienced a significant decrease of 47.3%, nearly half. When comparing the starting price of the 1.8 billion yuan project to the 14.445 billion yuan from land revenue, the amount does not seem excessive in terms of scale. However, this is only the situation at present, and the future remains uncertain. Moreover, if the 1.8 billion deal were to be finalized, it would also represent a substantial fiscal income for Hengyang.
Currently, there is a significant discrepancy between such statements and the actual situation. These statements are based on equating digital resources with land resources for sale. Firstly, there are two challenges here: land resources are monopolized locally, whereas not all digital resources are land. Because local authorities hold control, they can monetize through urban planning, but digital resources are not necessarily the same. Companies like Alibaba, Tencent, and Huawei have been laying out their data infrastructure for many years. Look at the internet companies that operate under the guise of technology; aren’t they all engaged in lending? Of course, they don’t call it lending; they refer to it as consumer finance. Once you enter your ID and scan your face, these tech companies collect your personal data, creating digital resources. So, if one were to really draw an equivalence, the monopolistic nature of this comparison requires careful consideration. However, if it’s just government data resources, their value is much greater than individual data. Essentially, land resources are akin to the ancient exclusive rights to salt and iron. Secondly, land resources can be ‘double-dipped’—once planned properly, developers bid for the land, providing local authorities with land concession revenue. There’s no need to wait for houses to be built; through the presale system, residents can take out loans to buy homes. Whether they can move in depends on luck. At this time, the bank earns interest on the loans for two or three decades. Anyone who has bought a house knows that the interest paid over 30 years exceeds the loan amount, which is another profit. Thus, drawing a direct comparison actually reveals a considerable divergence from the current situation.
Feasibility of China’s Government Data Sale
The current reliance of local finances on land is difficult to change in the short term. Data from Zhongtai Research shows that from January to September 2023, including Hengyang City, Liuzhou City, Huaian City, Zhangjiajie City, Panjin City, and Zhuzhou City, among 14 cities, the proportion of land acquired by local urban investment exceeded 50%. This dependence is necessary. Moreover, China’s government data sale is not solely about selling data. For instance, it involves enhancing the efficiency of fiscal operations through digitalization and optimizing tax collection using digital tools. These are all aspects of digital finance. Although the 1.8 billion yuan data auction in Hengyang was halted, as Zhang Xiqu, Associate Professor of Criminal Justice at China University of Political Science and Law, told China Newsweek, this initiative is a pilot experiment. According to the current understanding, as smart cities and urban digitalization progress nationwide, the sale of government data resources and franchise rights is likely still on the horizon, as this can generate significant funds. In 2022, the market size of smart cities in China reached 2.5 trillion yuan, but the conditions are not yet fully mature, such as who sets the pricing for data—is it the data holders or the market? And if it is the market, how are the pricing standards established?
There is a proposal circulating online to differentiate between government data and internet data. Government data is considered public data, whereas data held by internet companies is personal. It is suggested that public data be strictly regulated and protected from privatization, while personal data could potentially operate under a paid model. This division implies that the management of public data might become nationalized, akin to expectations for urban investment platforms. Regarding personal data, it is inherently private, such as someone’s phone number, fingerprints, or facial features, which should not be commodified without consent, regardless of its uniqueness.
In terms of implementation, it is necessary to clearly define which types of data are tradable and which are not. From a broader perspective, exploring this distinction is particularly valuable in the context of the current downturn in real estate. At a more tangible level, the concept may seem vast and unclear, yet it makes sense when considered more deeply, see detailed analysis in this article. After all, every small contribution counts in a trillion-dollar market.
