Guangdong plans to build regional data centre in Shenzhen with coverage of Hong Kong and Macau

China’s southern Guangdong province has tasked its tech hub Shenzhen with building a big data centre for the Greater Bay Area, which includes Hong Kong and Macau, to help the “orderly circulation” of data in the region, according to a data plan published by the Guangdong government on Sunday.

The provincial government also said that it will look into what it calls a Greater Bay Area “data custom”, which will be responsible for reviewing, evaluating and regulating cross-border data flow.

Data development plans involving the Greater Bay Area are slated for completion by the end of 2022, although the provincial government has not provided further details.

The city governments of Shenzhen, Guangzhou and Zhuhai will take the lead on big data efforts, the notice said, and the Cyberspace Administration of China (CAC)’s Guangdong provincial arm, along with other local government departments, will provide support. The scheme is part of a broad plan announced earlier by the Guangdong provincial government “to reform market-oriented data allocation as a production factor”.

Guangdong’s policy plans come as data becomes increasingly important to China’s economic development, and as Beijing strengthens data security and privacy. Chinese authorities are currently exploring how to create a viable data market that could help to unleash the economic potential of big data.

In April last year, the State Council added data as a new factor of production, along with land, labour and capital, with the goal that its circulation would help spur the economy’s digitalisation.

Guangdong province’s new plans also include building a data trading market in Shenzhen. It would not be the first city to build a data trading market though as local governments have now established at least 14 local data trading centres across the country, according to a report published in May by the China Academy of Information and Communications Technology (CAICT), a research institute under the Ministry of Industry and Information Technology (MIIT).

But none of the local data exchanges have taken off, with most still lacking attractive data, the CAICT report said. The small amount of data they have currently is of poor quality, updates slowly and cannot satisfy market demands, according to the report.

For example Guiyang, the capital city of Guizhou province, has failed to reach many of the lofty ambitions it set for itself. According to state-owned financial newspaper Securities Times, the former CEO of Guiyang’s Global Big Data Exchange, Wang Sanshou, announced at the establishment of the exchange in 2015 that the daily trading volume would hit 10 billion yuan (US$1.55 billion) within the next 3-5 years. But this target was later lowered to above 100 million yuan per year.

China’s new Data Security Law promises steep punishments

A key obstacle is the lack of an adequate legal framework for data trading, He Yuan, executive director at Shanghai Jiao Tong University’s Data Law Research Centre, told the South China Morning Post in April. Data trading faces complications, such as lack of clarity over data ownership, and the current requirement of Chinese law for companies to always ask for individual users’ consent before processing their data, said He.

“If the legal problems don’t get resolved, the sharing and trading of data is very difficult,” He said.

Heavy criminal penalties set by China’s Cybersecurity Law for personal data-related offences also make businesses hesitant to engage in data trading, according to the CAICT report.

After authorities launched investigations into several big data service providers including Hangzhou Moxie Technology in 2019 for illegally storing user data, a court in Hangzhou sentenced two Moxie executives to three years in prison each for illegally acquiring the personal information of citizens.

“The Moxie case brought data companies a lot of pressure,” Shanghai Jiao Tong University’s He said in April. “Under such a legal framework, companies would in many cases choose to not engage in data trading.”