China's proposed National Data Bureau, a new agency to be formed as part of a sweeping overhaul of government institutions under the State Council, is expected to become a powerful tool for Beijing to promote development of the country's digital economy, according to analysts.

The bureau, which will be under China's top economic planning authority the National Development and Reform Commission (NDRC), will be responsible for "coordinating and promoting the construction of data infrastructure, coordinating the integration, sharing, development and utilisation of data resources" across China's economy and society, according to the plan presented on Tuesday by State Council secretary general Xiao Jie to the National People's Congress for deliberation.

That means the bureau will take over many responsibilities from the powerful Central Office of the Central Cyberspace Affairs Commission. It will also be responsible for regulating China's digital economy and implementing a national big data strategy, including infrastructure, which has been under the NDRC.

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"Data is crucial to all commerce today and sectors have converged," said Alex Roberts, the Shanghai-based counsel for technology, media and telecommunications at multinational law firm Linklaters. "Having one regulator overseeing key aspects of data governance could bring benefits to businesses - domestic and international - in seeking to streamline rule-making."

The new bureau marks Beijing's latest effort to shore up the country's digital economy and increase the nation's international competitiveness, following the NDRC's presentation last October of an eight-pronged approach to bolstering the sector.

That approach includes pooling resources to pursue breakthroughs in core technologies, ramping up construction of digital infrastructure, stepping up digital innovations and establishing an advanced industrial cluster.

Creating the National Data Bureau also reflects Beijing's design to maintain control over certain information and to use such data for state-led development initiatives, similar to how it oversees other economic inputs like land, capital and labour.

The bureau is expected to become an "important organisational guarantee for the development of China's digital economy", helping mine and unleash the value of the nation's vast data resources, according to Li Zhi, head of the research facility at Beijing-based market consultancy Analysys International.

At present, many local governments have rushed to set up various local "big data bureaus" to break down data administration silos in their locations. A municipal big data bureau, for example, can usually pull together information from different functions such as public security, taxation, traffic as well as industry and commerce.

In December, Beiiing released a plan to build basic systems to put data resources to better use. Consisting of 20 measures, the plan involves the establishment of a property system, a circulation and trading system, an income distribution system and a governance system, according to state media Xinhua.

While details about the new bureau such as its size, budget and the officials to lead it remain unknown, the new agency forms a major part of the State Council's broader restructuring plans, which include an empowered role for the Ministry of Science and Technology to counter US technological containment and creation of the new National Financial Regulatory Commission to oversee the country's banking and insurance assets

The proposed National Data Bureau is expected to deal primarily with the development side of data governance in China, according to Tom Nunlist, senior analyst for tech and data policy at research service Trivium China.

"The security side will still firmly be [the domain of the] CAC [Cyberspace Administration of China]," Nunlist said. CAC's still head honcho when it comes to data security, and so the creation of this new agency won't directly impact any of that."

Still, he indicated that it remains unclear how the new bureau would help resolve the confusion about the complicated compliance procedures that the CAC has put in place.

Compliance with China's strict new cross-border data transfer regulation, which took effect on September 1, requires all affected companies to fill in and submit a slew of paperwork for review to the CAC, the country's internet watchdog.

"In terms of these front-and-centre questions, including what we do about important data and data-export rules, I think [the proposed new bureau] pretty much sheds zero light for the time being on how those will develop going forward," Nunlist said.

China's data and cybersecurity regime has been perceived as creating a restrictive business environment under which multinational companies in the country face higher operating costs owing to its complexity.

Beijing passed two laws in 2021 - the Data Security Law and Personal Information Protection Law - that restrict cross-border data flows and enforce localisation. These regulations, which build on the groundwork laid by the Cybersecurity Law of 2017, have wide-ranging implications for how companies operate in China.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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