China Commercialises Data as Strategic Asset to Advance AI Goals

A U.S. congressional advisory body said on Tuesday that China is commercialising and monetising data as a strategic national asset to support its artificial intelligence and technology ambitions. The approach could potentially give Beijing an advantage over the United States in the AI race.

The U.S.-China Economic and Security Review Commission said China is marshalling data to drive productivity while also strengthening its intelligence collection and military capabilities.

China’s National Data Administration did not immediately respond to a faxed request for comment outside working hours.

China Builds Data Advantage for AI

While major U.S. AI companies have largely exhausted the open internet for language-model training, China is systematically collecting domestic enterprise, operational and physical-world data that cannot be scraped.

That data is crucial for developing AI tools for business applications, autonomous vehicles and humanoid robots. These technologies have become a major symbol of Beijing’s top-down approach to innovation.

The report said China’s advanced manufacturing and industrial robotics ecosystems offer a vast pool of high-quality data for embodied AI applications. Such systems operate in the physical world, including robots, and could give China a potential advantage in developing robotics software for commercial and military purposes.

“Over the last half decade, China has been able to consolidate data, find ways to label it and refine it, and hoover up new data and make sure it’s quickly made available to entities,” said Mike Kuiken, the commission’s vice chair, in an interview.

He said this approach benefits China’s innovation ecosystem while also enhancing the control of the Chinese Communist Party.

Tighter Controls on Cross-Border Data

China has tightened regulatory oversight of cross-border data transfers in recent years. As a result, foreign multinational firms operating in the country have faced widespread compliance issues.

To comply with China’s cross-border data regulations, firms had to further localise their China subsidiaries and separate Chinese customer data from their global operations. Beijing has since introduced limited exemptions for some firms.

The report said U.S. companies operating in China risk running afoul of the country’s strict data and cyber governance regimes.

Data Becomes a Strategic Economic Asset

China has elevated data to a core “factor of production” alongside land, labour, capital and technology. In 2023, it established the National Data Administration, which oversees nationwide data standardisation and classification.

The administration also aims to build a unified national market for data trading. Meanwhile, Beijing has pursued the commercialisation and deployment of data across its digital economy as part of a broader effort to deploy AI across industries.

China aims to standardise data assets across critical sectors, including manufacturing, transport, finance and healthcare. At the same time, Chinese firms have begun listing proprietary datasets on regional data exchanges in cities including Shanghai, Shenzhen and Beijing.

Kuiken said the U.S. Congress should consider developing a national data strategy and treating data as an economic asset.

With inputs from Reuters