China just set up a new bureau to mine data for economic growth

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China’s annual, week-long parliamentary meeting just ended on Monday. Apart from confirming President Xi Jinping for a historic third term and appointing a new batch of other top leaders, the government also approved a restructuring plan for national ministries, as it typically does every five years.  

Among all the changes, there’s one that the tech world is avidly watching: the creation of a new regulatory body named the National Data Administration.

According to official documents, the NDA will be in charge of “advancing the development of data-related fundamental institutions, coordinating the integration, sharing, development and application of data resources, and pushing forward the planning and building of a Digital China, the digital economy and a digital society, among others.” 

In plain words, the NDA will help build smart cities in China, digitize government services, improve internet infrastructure, and make government agencies share data with each other. 

The big question mark is how much regulatory authority it will exert. At the moment, many different governmental groups in China have a hand in data regulation (last year, one political representative counted 15), and there is no government body that has an explicit mission to protect data privacy. The closest the country has is the Cyberspace Administration of China, which was originally created to police online content and promote party propaganda.

“It makes sense to set something [like NDA] up, given how important data is,” says Jamie Horsley, a senior fellow at the Paul Tsai China Center at Yale Law School, who studies regulatory reforms in China. “But the problem anytime you try to streamline government is that you realize every issue impacts other issues. It’s very hard to just carve out something that’s only going to be regulated by this one entity.”

For now, it seems this new department is part of an ongoing effort by the Chinese government to drum up a “digital economy” around collecting, sharing, and trading data.  

In fact, the new national administration greatly resembles the Big Data Bureaus that Chinese provinces have been setting up since 2014. These local bureaus have built data centers across China and set up data exchanges that can trade data sets like stocks. The content of the data is as varied as cell phone locations and results from remote sensing of the ocean floor. The bureaus have even embraced and invested in the questionable concept of the metaverse. 

Those bureaus tend to view data as a promising economic resource rather than a Pandora’s box full of privacy concerns. Now, these local experiments are being integrated and elevated to a national-level agency. And that explains why the new NDA is set up under China’s National Development and Reform Commission, an office mostly responsible for drawing broad economic blueprints for the country.

We may not get clarity on NDA’s full scope of authority until the summer, when its organizational structure, personnel, and regulatory responsibilities are expected to be put down in writing. But analysts think that it’s not likely to replace the Cyberspace Administration of China, which has risen up in recent years to become the “super regulator” of the tech industry. 

“Although CAC will lose a few things, its core power has not been significantly undermined,” wrote Tom Nunlist, a senior analyst on tech and data policy at the analytical firm Trivium China. Likely, it will keep exerting control in many of the areas it has been regulating for years: keeping big tech companies in check, ramping up internet censorship, and scrutinizing multinational companies for security issues related to data transfer.

But the creation of the NDA could mean CAC won’t have total reign over China’s internet. That could be a boon for transparency. Because CAC is a branch of the Chinese Communist Party rather than the government, it is subject to fewer disclosure requirements when it comes to its budgets, duties, and rule-making processes. It’s also likely to focus on policies around ideological governance and national security rather than on economic development.

Making the NDA a government agency is a big move, given how party-centric China’s leadership is today, Horsley says: “[China is] a party-state, but the state piece of it is still very important … Of course, it’s supposed to be loyal to the party, but it’s also supposed to deliver [on economic development goals].” 

What impact do you think the new National Data Administration will have on the Chinese tech world? Let me know your thoughts at ze**@**************ew.com.

Catch up with China

1. Silicon Valley Bank, which collapsed last week, was among the first financial institutions to cater to Chinese startups and connect them with US investors. (The Information $) 

2. China has brokered an agreement between Iran and Saudi Arabia to reestablish diplomatic relations, filling a diplomatic vacuum left by the United States. (Vox)

3. Hundreds of Baidu employees are working around the clock and borrowing computer chips from other departments to get ready for the launch of Ernie Bot, Baidu’s answer to ChatGPT, this coming Thursday. (Wall Street Journal $)

4. Shou Zi Chew, TikTok’s CEO, has sought closed-door meetings with at least half a dozen lawmakers in Washington, DC. He is scheduled to appear before a congressional hearing regarding privacy and national security concerns about TikTok later this month. (Forbes $)

5. China may control 32% of the world’s lithium mining capacity by 2025, the investment bank UBS AG estimates. (Bloomberg $)

6. China reappointed Yi Gang as the head of the central bank, signaling continuity in its monetary policies. (AP) 

• Meanwhile, China’s state-backed chip investment fund, shaken by corruption investigations, is getting a new chief. (Bloomberg $)

7. The “996” overwork culture in China, embraced by tech companies a few years ago, is not going away easily. An executive at a Chinese auto company recently asked its legal department to figure out “how to avoid legal risks” in asking employees to work on Saturdays. (Sixth Tone)

Lost in translation

In central China, a young entrepreneur is reimagining retirement homes by teaching the senior residents how to play e-sports. As Chinese gaming publication ChuApp reports, Fan Jinlin, a 25-year-old in Henan province, took over his family’s retirement home business after college. He started creating video content about the lives of the residents and quickly attracted millions of followers on Douyin, the Chinese version of TikTok. 

In February 2022, he began building an e-sports room in his fifth retirement home and recruiting seniors who are interested in video games. Zhang Fengqin, a 68-year-old retired bank clerk, is one of them. She saw the news on Douyin and applied. Soon, she grew from someone who didn’t even know how to use a mouse to a proficient player of Teamfight Tactics, a popular game that doesn’t require quick reflexes as much as strategic thinking. Ultimately, Fan wants to build a professional team to play in tournaments, but to achieve that, he would need at least seven participants like Zhang. Right now he only has three.

One more thing

The number 2,952 has disappeared from China’s social media platform Weibo. Why? Because President Xi Jinping extended his rule for another five years last week, having received 2,952 votes approving the extension—with zero opposed and zero abstaining—in China’s ceremonial legislative body, the National People’s Congress. While everyone knew Xi would get a third term, the fact that there was not a single opposition vote still got people talking about how pointless the procedure was. Just a few days later, Weibo blocked search results on the number.