Shenzhen Data Exchange Photo: IC PHOTO

Today, data has become a key production factor alongside land, labor, capital, and technology. China is at a critical juncture in the development of its digital economy, and its data market is still in its nascent stage, with several factors hindering the secure and efficient flow of data. Therefore, improving the data market transaction system is not only a necessary step to realize the value of data but also an important measure to promote the modernization of the national governance system and governance capacity. 

Challenges 

In recent years, China’s data transaction market has developed rapidly, with data exchanges established in Beijing, Shanghai, Guiyang and other cities. In 2023, the size of China’s data transaction market exceeded 100 billion yuan. Data transactions span various sectors such as finance, healthcare, and transportation, with transaction objects encompassing data products, data services, and data assets. However, China has yet to introduce specific institutional regulations governing data transactions. Existing laws, such as the Data Security Law and the Personal Information Protection Law struggle to meet the needs of the data transaction market due to the absence of clear guidance on the specific rules and processes governing data transactions. 

First, data property rights are not clearly defined. Issues such as the ownership of personal data and the scope of public data sharing remain unsolved, which not only affects the legality of data transactions but also impedes the full realization of data value. 

Second, the data pricing mechanism is inadequate. Due to the intangible and replicable nature of data, valuing it is challenging. At present, most transactions rely on negotiations between parties, as there is no unified pricing standard or methodology, which is likely to lead to unreasonable pricing and unfair transactions. 

Third, ensuring data quality and security is difficult. While quality is a key factor influencing data’s value, data currently in circulation varies considerably in quality, with issues such as fabrication and incompleteness. In addition, security risks such as data breaches and misuse undermine the foundation of trust essential for data transactions. 

Fourth, data transaction platforms are underdeveloped. Limited platform functionality, complex transaction processes, and insufficient service capacity constrain the large-scale development of data transactions. 

Significance 

Establishing a scientific, standardized, and efficient data transaction system can ensure the healthy development of the digital economy and help China gain a competitive edge in the global digital economy. 

First, establishing standardized transaction rules and processes can reduce the costs and risks of data transactions, fostering a healthy market ecosystem where supply and demand are balanced. Second, the establishment of a regulatory framework and a credit system for data transactions can prevent illegal activities such as data misuse and privacy violations, improve market transparency and fairness, as well as strengthen trust and the sense of security among all parties involved in transaction. Third, improving the data market transaction system will help China take a proactive role in international data governance and safeguard national data sovereignty and security. 

Path to improvement 

Improving data property rights rules: A system for data classification and grading, as well as data rights confirmation and authorization, should be established to clarify the ownership, legal status, content of rights, and scope of application for different types of data, including public, corporate, and personal data. The data registration system should be improved with the establishment of a unified data property rights registration platform. 

Optimizing data transaction facilitation mechanisms: Firstly, the basic principles, parties, objects, and processes of data transactions should be clarified to provide legal foundations for data market transactions. Secondly, quality indicators such as data accuracy, consistency, integrity, timeliness, and usability should be developed as the basis for a scientific and comprehensive data value assessment system. Thirdly, safeguarding market order and optimizing the transaction environment requires developing a multi-level data transaction market as well as establishing market access requirements and operational standards for data transaction service providers. 

Strengthening transaction security regulation: Firstly, it is necessary to clarify the security and compliance requirements for data transactions and impose stricter penalties for data infringement, data breaches, and illegal data transactions. Secondly, the development and application of data security technologies should be enhanced. Thirdly, regulatory technology should be leveraged to facilitate a combination of government oversight, industry self-regulation, and public monitoring. 

Strengthening international cooperation and exchange: China should actively participate in the formulation of international data transaction rules and promote the establishment of fair and equitable international mechanisms for data flows and transactions. Provided that data security is ensured, China can explore the creation of cross-border data transaction pilot zones. 

Li Xiaonan is a research fellow from the Center for Economic Rule of Law at Zhengzhou University. 

Edited by WANG YOURAN