Data, the prodigy among traditional production factors like land, capital and labor, is now the lifeblood of digitization and networking, infiltrating every facet of production to social governance. The upshot: data as a production factor, known as “data factor” in the Chinese language, are turbocharging China's modernization in an irrefutably data-centric era of economic globalization.
Similarly, the digital economy's rise has sparked a global boom of large language models. This development, driven by various forms of data, has ignited a renewed appetite for data. In this new era, data propel the evolution of large language models, fuelling human technological progress. This symbiosis, energized by policy initiatives, has sent the “data factor” industry growing quickly.
Amid this relentless global data gold rush, the International Data Corporation (IDC) predicts the world's data volume will reach an astounding 163ZB by 2025. China's data factor market, already hefty at 81.5 billion yuan in 2021, is projected to maintain a 25% compound growth rate throughout the "14th Five-Year Plan" period.
The exponential growth of data volume, advances in data analysis and innovative applications are driving societal transformation and rapidly expanding industries and professions.
The Trends
Data factors have captured massive attention in recent months, an intensity unseen in nearly a decade, according to TiPost's analysis.
National and international forums and summits focusing on data are springing up across mainland China and Hong Kong, with Hangzhou, a digital hub similar to the Silicon Valley, taking the lead. This city hosted the inaugural Future Data Business Conference in February, soon after Shanghai's Global Data Ecosystem Conference. Other key summits included the Global Digital Technology Summit inHangzhou and the Tech Innovation Industry Summit.
In a pivotal development, the National Data Bureau was founded in March. Subsequently, policies aiming to foster the data factor industry's growth have surfaced nationwide.
The National Development and Reform Commission in April urged the implementation of the '1+N' data factor system and encouraged localities and industries to pioneer data factor utilization. For the first time, data factorization appears central to the 'new infrastructure' scope.
A private equity industry insider suggests this move indicates the strategic value attributed to data and reflects a proactive attitude towards data as a production factor. Consequently, A-share market data factor concept stocks have become a magnet for capital.
Investors’ endorsement is buoyed by the expectation of an industrial wave. Similar to labor and land in the agricultural era, and capital and technology in the industrial era, data is a new production factor in the digital age.
Hangzhou's hosting of the fourth United Nations World Data Forum in April, the first such global event in the Asia-Pacific region, underscores four themes: digital innovation application and cooperation, data value extraction, data credibility enhancement and data ecosystem development.
UN Secretary-General António Guterres, in his opening remarks, equated the value of data in the 21st century to oil in the 20th century. He urged the use of data's transformative power to accelerate progress towards sustainable development goals.
Echoing this sentiment, Siddharth Chatterjee, the UN Resident Coordinator in China, highlighted data as key to addressing today's global challenges. These statements underscore the value of data resources and anticipation for the burgeoning data industry.
Guangdong Province's recent move to include data factors in GDP calculations exemplifies this shift. Debates around "data factors replacing land factors" and the surge of enthusiasm for data factorization in capital markets further illustrate this trend.
With industry transformation on the cusp, economist John Kenneth Galbraith's words ring true: "Whoever controls the most important production factor of an era will hold power and obtain more benefits in income distribution."
Data Factorization Scene with Innovation
Data factorization, the transformation of data into a new kind of production asset that generates income, involves the marketization, industrialization and capitalization of data circulation. This complex process requires a departure from traditional ownership and pricing models, necessitating fresh innovations in mechanisms, concepts and operational entities.
Wang Jiandong, Deputy Director of the Price Monitoring Center of the National Development and Reform Commission, suggests that the growth of the data circulation market relies on unlocking the full potential of data assets. This requires creating a new data pricing mechanism, a paradigm tailored to the digital economy's nuances and grounded in the realities of its development.
However, marketizing data factors isn't just about pricing mechanisms. It signifies a holistic innovation, one that sets the stage for deeper and more effective utilization of data. The importance of this innovation for data factorization is clearly illustrated in the fluctuating trajectory of the data exchange market over the past nine years.
China embarked on the journey of setting up data trading institutions akin to stock exchanges in 2014. As of November 2022, 48 such institutions had been established, with eight more in the pipeline. Despite their ambitious beginnings, many of these early data trading institutions struggled to find successful business models. Yet, in the last two years, top-level policies have incited the birth of a new wave of data trading institutions across various regions.
These institutions, backed by solid technical support and sharpened rules, have quickly identified their unique positions and breakthroughs in the data factor market. They're focusing on strategies to dissolve information asymmetry between data supply and demand, encourage market-oriented pricing mechanisms and establish replicable transaction systems and rules.
