China’s AI race needs data fuel. Can a new state-owned giant deliver?

Beijing is determined to transform China's extensive data resources into a powerful engine for artificial intelligence and economic growth by establishing a centralized national data group. The organization, launched on October 20 as a state-owned venture in Xiongan New Area, Hebei province, is seen as a major strategic move to bolster China's competitiveness in the AI and digital economy sectors. According to Vice-Premier Ding Xuexiang, the initiative aims to strengthen China's standing globally in these fields.

The central data group is expected to lower data sharing costs, accelerate the transformation of data into marketable assets, and support economic development by unlocking the value of China's vast data resources. Research director Zhou Lisha from Tsinghua University's Institute for Modern State-Owned Enterprises highlighted that the move could help drive economic growth through the unlocking of data value, as reported by the Xiuzhong College.

Professor Sun Yi from the University of Chinese Academy of Sciences suggested that the new group could set unified data standards and coordinate data collection and procurement, providing high-quality datasets for domestic AI models and applications like robotics. State media People’s Daily reported that Beijing is supporting the entity with top-tier enterprises like telecom carriers and power grid operators, which could provide the group with incumbent resources and infrastructure, according to analysts from Guohai Haitong Securities.

Yu Yun, head of China Southern Power Grid's digitisation department, said the company would integrate its energy-sector data with the national platform to facilitate data exchange and develop applications that combine computing power and electricity resources. Despite the promising outlook, experts have raised concerns about potential challenges.

Senior researcher Yu Fenghui from the Pangoal Institution warned of existing barriers to data sharing and commercialization, such as inadequate transaction safeguards and inconsistent standards across different regions. The industry's main hurdle now seems to be navigating fragmented rules that hinder data flow across regions and industries, Yu added in a report by the Securities Times.

The group's success will also depend on striking a delicate balance between its state-backed role and market-oriented operations. An editorial in People’s Posts and Telecommunications News cautioned that excessive administrative intervention could stifle innovation, while an overemphasis on profits might undermine its mission. The editorial emphasized that the group should act as an enabler rather than a replacement for existing businesses, focusing on infrastructure, data-sharing standards, and major applications.