The Strategist

Data privacy issues can deprive China's economy of $ 5.5 trillion


03/25/2019 - 14:07



If China pay no special attention to the problem of data privacy and protection of intellectual property, the country will lose the opportunity of growth worth 37 trillion yuan ($ 5.5 trillion) in the coming decade. This became known from a report of the non-profit organization Hinrich Foundation.



Tom Thai via flickr
Tom Thai via flickr
In 2017, China's digital data streams brought 3.2 trillion yuan to the domestic economy and 1.6 trillion yuan - abroad. By 2030, the growth of digital commerce, especially in the consumer and retail business sectors, will increase China's economy by 37 trillion yuan, analysts say. This is about one-fifth of China’s projected GDP, the report states.

The document describes the “action priorities” for China. The country must accept terms of the Asia-Pacific Economic Cooperation Privacy Framework and guidelines for protection of personal information set forth by the International Organization for Standardization.

Also, China will be able to achieve growth through digital trade, if it clearly determines what kind of content is illegal, will balance the rules protecting intellectual property rights. Some Chinese digital companies will not be able to conduct business if access to a number of online materials is limited, the report says.

China is notorious for blocking internal access to websites that Beijing considers a threat: The New York Times, Facebook, Twitter and YouTube. Google search also does not work. Chinese Internet censors are exploring social networks to block inappropriate content. The Great China Firewall can reduce business productivity and sow fear among companies that are afraid that they can be closed overnight. With regard to protection of intellectual property, foreign companies note that Beijing has made some progress. This is especially true for new laws: a law on foreign investment has recently been announced, which should provide China with global technological leadership. However, implementation of the law still raises questions.

The US often complains that foreign companies are forced to transfer valuable technology if they want to work in the Asian country. Beijing declared these transfers illegal by adopting the latest foreign investment law.

Thanks to the Chinese population, which exceeds 1 billion people, the country's technology companies quickly became world giants. Two of the three largest startups in the world are Chinese (Bytedance and Didi), according to CB Insights. These and other companies receive a ton of data because consumers enjoy convenience of mobile payment and fast delivery of goods ordered online.

Massive dissemination of such information raises concerns about data privacy. Beijing seeks to limit overly detailed data collection by the private sector and strengthen intellectual property protection. But critics say that these efforts are not enough. Hinrich report points out that faster implementation of relevant policies can help digital data streams strengthen China’s economy.

source: cnbc.com