China Pioneers Data as an Asset, but Adoption Lags
China is making a bold move in the global economy by allowing companies to list data as assets on their balance sheets, a first-of-its-kind policy with the potential to reshape global standards. The initiative aims to create a marketplace for data, potentially boosting company valuations and offering a fresh approach to economic growth. However, despite the policy’s groundbreaking nature, uptake has been slower than anticipated, highlighting the complexities and challenges involved.
The policy, implemented by the Ministry of Finance, permits companies to classify data as inventory or intangible assets—a move that has caught the attention of businesses and policymakers around the world. This innovative approach is not currently mirrored by any other country on a national scale. “No other country is trying to do this on a national level. It could drive global standards of data management and accounting,” explained Ran Guo, an affiliated researcher at the Asia Society Policy Institute specializing in data governance in China, during an interview with Rest of World.
Data’s Growing Importance
The significance of this policy is underscored by the sheer volume of data generated in China. In 2023 alone, the nation produced 32.85 zettabytes of data, representing over 27% of the global total. To put this in perspective, storing that amount of data on 1-terabyte hard drives would require over 32 billion units—a staggering figure.
By 2025, the International Data Corporation projects that global data generation will surge to 174 zettabytes, with China’s share growing to 48.6 zettabytes. This growth rate is the fastest of any nation, highlighting the critical importance of managing and leveraging data effectively.
Cautious Adoption and Challenges
Despite the potential benefits and government backing, Chinese companies have shown a cautious approach to recording data assets. By late 2024, only a small fraction of registered companies in China had taken advantage of the new policy. According to estimates from Shanghai Jiao Tong University, only 55 listed and 228 non-listed companies out of nearly 60 million had recorded data assets on their balance sheets. Of these, a mere 18 were primarily in the IT services and software industries.
Tech companies that are data-rich are well-positioned to benefit from logging data as assets to turn the formalized assets into tradable commodities.
Companies face significant hurdles in adopting the new policy, including the need to invest in secure storage and demonstrate that the data was legally obtained. “This can be costly and complex,” added Guo. “Not all data qualifies as an asset, and companies must meet stringent requirements.”
Even state-owned enterprises, such as China Unicom, the government-owned telecom operator, face pressures to comply with the new policy, potentially more from political incentives than economic ones, according to Guo.
Government Push for Data Monetization
The Chinese government has been actively promoting data monetization, viewing it as a critical factor for economic growth. Officials have repeatedly emphasized the importance of data as a key resource. In 2022, the government issued statements encouraging private enterprises to make their data available. The National Data Administration (NDA) was established to oversee national data governance and integrate fragmented local markets into a unified market for data. These efforts are part of a broader strategy to create a digital economy where data is a central element for production.
Smaller companies are watching what bigger firms are doing first. There is a lot of interpretation involved, so we rely on standard-setters.
In December 2024, four government agencies released a joint statement offering to protect companies’ data resources if they “open up their data service capabilities.” Furthermore, the NDA plans to launch a national data resources platform, a hub where government entities can list and trade public data. Several Chinese provinces have established their own data exchanges, emphasizing a push to monetize data within state-controlled marketplaces.
Uneven Playing Field And Global Implications
While the government is pushing for data monetization, the path forward is not without hurdles. Early attempts to monetize data have faced challenges due to issues like weak standards, data quality concerns, and low trust. This has resulted in market failures, hindering the broader adoption of these new policies. The government aims to drive a “gold rush” to improve and make use of existing troves of data.
The policy’s potential consequences extend beyond China’s borders, especially for multinational companies like Alibaba and Baidu. These corporations face significant compliance risks and face vastly complex implications while reporting their data assets, due to varying data security and privacy regulations around the world. The impact of the initiative is also expected to reach international bodies like the United Nations, which are already considering updates to accounting frameworks to better incorporate intangible assets.
Despite the challenges and the initially slow business uptake, the Chinese government remains steadfast in its vision for data monetization. The country is positioning itself to influence global accounting norms by establishing national standards early, even if only a fraction of its companies fully embrace the changes. The government’s push for data monetization aims to revitalize a slowing economy by facilitating the use of existing data to unlock its economic value.
