The Rise of Data Politics: Digital China and the World

Data has become one of the most valuable assets for governments and firms. Yet, we still have a limited understanding of how data reshapes international economic relations. This paper explores various aspects of data politics through the lens of China's digital rise and the country's global engagement. I start with the theoretical premise that data differs from traditional strategic assets (e.g., land, oil, and labor), in that it is nonrival and partially excludable. These characteristics have generated externality, commitment, and valuation problems, triggering three fundamental changes in China's external economic relations. First, data's externality problem makes it necessary for states to regulate data or even to pursue data sovereignty. However, clashes over data sovereignty can ignite conflicts between China and other countries. Second, the commitment problem in data use raises global concerns about foreign government surveillance. As data is easier to transfer across borders than physical commodities, Chinese tech companies' investments abroad are vulnerable to national security investigations by foreign regulators. Chinese tech companies, therefore, confront a "deep versus broad" dilemma: deep ties with the Chinese government help promote their domestic business but jeopardize their international expansion. Lastly, data's valuation problem makes traditional measures (e.g., GDP) ill-suited to measure the relative strengths of the world's economies, which may distort perceptions of China and other states.