Shanghai expands scope of virtual asset trading to become a ‘data industry innovation highland’ worth US$69 billion by 2025

Shanghai plans to expand the scope of virtual asset trading in the metropolis over the next few years, according to the municipal government’s 2023-2025 digital economy master plan published on Tuesday.

Under that plan, the existing Shanghai Data Exchange, which started trading various data products in November 2021, will be transformed into a larger “national-level data exchange” capable of covering transactions across the country by 2025 amid efforts to set up a new “digital asset board”.

Some 5,000 data products are expected to be listed on the exchange by 2025, with a focus on major industries that include finance, logistics, technology and manufacturing. By 2025, the exchange is also expected to serve about 100,000 entities involved in the supply and purchase of data products.

That expansion is expected to increase the value of Shanghai’s data industry to about 500 billion yuan (US$69 billion) by 2025, according to the municipal government.

The opening of the Shanghai Data Exchange and Global Data Ecosystem Conference on November 25, 2021, saw an initial 20 data products made available for trading. Photo: Xinhua

The city’s master plan aims to build a “data industry innovation highland”, with the goal to attract or foster 1,000 companies, create 1,000 branded data products and establish 20 “national-level industry benchmarks” by 2025.

China is trying to apply commercial rules to create a market for data, which is regarded by Beijing as a new production factor, in the same category as land, capital, human labour and technology.

As of November last year, about 48 local data exchanges – including those in southern tech hub Shenzhen and in Guiyang, capital of southwest Guizhou province – have been established, while eight more are being developed, according to a white paper published in January by the state-run think tank China Academy of Information and Communications Technology (CAICT).

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These exchanges are expected to address thorny issues such as how to classify, set a price and trade valuable data made available by companies.

In May, the state-backed Guiyang Global Big Data Exchange – the country’s first data exchange that began operations as early as 2015 – facilitated the country’s first sale of personal data, according to the provincial government of Guizhou in southwest China.

Meanwhile in Shanghai, “all kinds of entities” are encouraged to buy data products through the city’s data exchange, according to the municipal government. It indicated that those which meet certain conditions can be entitled to tax deduction for their research and development expenses.

Chinese laws, however, have yet to clarify definitions of data ownership and related rights, making it difficult for the industry to form a consensus, CAICT wrote in its white paper.

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Shanghai’s digital economy plan would also ramp up the development of artificial intelligence and other cutting-edge technologies, which are relevant to the analysis, research and application of data, according to the municipal government.

Other developments to be pursued include “innovations such as blockchain-linked chips and operating systems, and the application of key technologies such as 6G and quantum communications”.

By 2025, the total scale of Shanghai’s computing power network will “quadruple from the end of the 13th Five-Year Plan”, which concluded in 2020, according to the municipal government.

South China Morning Post