CHINA’S 1.1BN internet users churn out more data than anyone else on Earth. So does the country’s vast network of facial-recognition cameras. As autonomous cars speed down roads and flying ones criss-cross the skies, the quality and value of the information flowing from emerging technologies will soar. Yet the volume of data is not the only thing setting China apart. The government is also embedding data management into the economy and national security. That has implications for China, and holds lessons for democracies.

China’s planners see data as a factor of production, alongside labour, capital and land. Xi Jinping, the president, has called data a foundational resource “with a revolutionary impact” on international competition. The scope of this vision is unparalleled, affecting everything from civil liberties to the profits of internet firms and China’s pursuit of the lead in artificial intelligence.

Mr Xi’s vision is being enacted fast. In 2021 China released rules modelled on Europe’s General Data Protection Regulation (GDPR). Now it is diverging quickly from Western norms. All levels of government are to marshal the data resources they have. A sweeping project to assess the data piles at state-owned firms is under way. The idea is to value them as assets, and add them to balance-sheets or trade them on state-run exchanges. On June 3rd the State Council released new rules to compel all levels of government to share data.

Another big step is a digital ID, due to be launched on July 15th. Under this, the central authorities could control a ledger of every person’s websites and apps. Connecting someone’s name with their online activity will become harder for the big tech firms which used to run the system. They will see only an anonymised stream of digits and letters. Chillingly, however, the ledger may one day act as a panopticon for the state.

China’s ultimate goal appears to be to create an integrated national data ocean, covering not just consumers but industrial and state activity, too. The advantages are obvious, and include economies of scale for training AI models and lower barriers to entry for small new firms.

Some of the disadvantages are equally clear, however. The state has a poor record of managing personal data: Shanghai’s police lost 1bn records to a hacker. If private firms lose control over the data they create, profits could suffer, diminishing the incentives to innovate. Although the digital-ID scheme may supersede the existing clunkier online surveillance system, in which low-level enforcers abuse their enormous powers, the new approach looks a lot like a paradise for Big Brother.

Most countries are grappling with how to manage and control data. According to some reports, the Trump administration may consider hiring Palantir, a private tech firm, to consolidate government data pools. The European Union may have to update its GDPR rules. India’s Aadhaar system for IDs emphasises privacy at the possible expense of boosting the economy.

All countries need scale and efficiency in data management. Yet for democracies the task is harder, because they must build in checks and balances that safeguard property rights, privacy and civil liberties. As it embraces its vast experiment, China will put less weight on such things and could build an efficient and dystopian system of surveillance. For decades it has been a “fast follower” of Western innovations. If China now races ahead in showing the financial value of its national data ocean, its method of centralisation will pose not just an economic challenge, but also a political one. ■

Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence.

• China
• Data
• Internet Users
• Facial-Recognition
• Autonomous Cars
• Emerging Technologies