By Josh Ye and Julie Zhu

HONG KONG (Reuters) – China has announced plans for a national data bureau, describing it as part of an effort to coordinate data resources in the country and to achieve a vision of “digital China” conceived by President Xi Jinping.

Its formation, which is part of a sweeping government reshuffle, is set to be voted by on China’s legislature on Friday.

Here’s what we know, and don’t know about the new bureau:

WHAT IS THE BUREAU IS BEING SET UP TO SUPPORT?

Xi’s vision for a “digital China” aims to see the country populated by smart, internet-connected cities and data treated alongside labour and capital as a key factor to drive the economy and help China compete more effectively globally.

While not as well known internationally as his other initiatives such as the Belt and Road, the topic of a digital economy has repeatedly come up during meetings of Chinese leaders over the past decade. Some local media reports say Xi first mentioned the term in 2012.

Since 2014, several cities including Shenzhen and Shanghai have launched data exchanges that allow information sets from coal trading volumes to company credit ratings to be traded.

Such efforts, however, have been considered fragmented and talk of a more unified approach has emerged in recent months.

In December, China’s top leadership published an outline of how China should develop basic data systems and utilize the country’s data resources. Last week, they unveiled a new plan that aims for the country to lead digital development globally by 2035. 

“In retrospect, recent developments were clearly building toward the inauguration of this new agency,” analysts at Trivium China said in a note on Tuesday.

WHAT MAY THE BUREAU BE RESPONSIBLE FOR?

The plan submitted to parliament was scant on detail, saying the bureau would be responsible for “coordinating the integration, sharing, development and application of data resource” and promoting the construction of smart cities.

One person familiar with China’s regulatory thinking said the new bureau will create rules for data property rights, circulation, pricing and trading, an effort that could benefit data-rich companies, at least financially, such as the big internet giants. 

Citic Securities analysts said in a note on Tuesday they believed the bureau’s formation meant that “China will accelerate the development of the data factor market within the country.”

Areas to watch include big data infrastructure, data processing, the digitization of government data as well as data encryption, they added.

WILL THE BUREAU HAVE REGULATORY POWER?

Analysts say no, upon first read. The bureau will be run by the state planner, the National Development and Reform Commission (NDRC), rather than the country’s internet watchdog, the Cyberspace Administration of China.

“The new agency seems to be more on the ‘data productivity’ side, to make and develop data as a strategic strength for China,” said Michael Tan, a Shanghai-based partner of law firm Taylor Wessing. “That also explains why CAC remains and this new agency belongs to NDRC.”

The CAC has in the past six years rolled out new cybersecurity, data and privacy laws that govern how organizations should handle and transfer data domestically and abroad.

ARE OTHER COUNTRIES DOING ANYTHING SIMILAR?

Last year, the World Economic Forum said that India, Colombia and Japan were exploring similar data exchange concepts but not much detail has been available.

Europe has raised the issue of where data is hosted and processed as a matter both of sovereignty and security and in 2020 launched cloud computing platform Gaia-X as an alternative to U.S. cloud computing providers.

(Reporting by Josh Ye and Julie Zhu in Hong Kong; Additional reporting by Josh Horwitz in Shanghai; Editing by Brenda Goh and Christian Schmollinger)

---