The data property rights system is a fundamental system for achieving market-oriented transactions of data factors, releasing the value of data factors, and promoting high-quality development of the digital economy.

The Opinion on Constructing Fundamental Data Institutions to Better Play the Role of Data Factors (hereinafter referred to as the Opinion), issued by the Central Committee of the Communist Party of China (CPC) and the State Council on December 19, 2022, proposes the construction of a data infrastructure system, which will require the establishment of four basic systems: data property rights, circulation and trading, income distribution, and security governance.

The innovative proposal of a structural division system for data property rights is not only an important innovation in the data property rights system, but also contributes a Chinese model to the exploration of global data property rights systems.

Design focus

Data property rights are a prerequisite for promoting the market-oriented allocation of data factors, maximizing their value, and achieving high-quality development of the digital economy. Firstly, a clear definition of data property rights will promote the market-oriented allocation of data factors. Secondly, the definition of data property rights can fully protect the investment and innovation benefits of data development and utilization entities, thereby providing effective incentives for data collection and utilization and data-driven innovation, and fully unleashing the enormous potential of data factors to promote economic growth. Finally, a clear definition of property rights is the institutional guarantee for a reasonable balance of the rights and interests of all parties.

Non-competitiveness is the fundamental economic attribute of data factors. The value of data in the digital economy is mainly reflected in the integration of massive data to form big data, with its most important characteristics being massive, multi-dimensional, and timely. Therefore, it is necessary to innovate relevant property rights systems based on the economic attributes of data factors.

Data rights confirmation should promote the optimal allocation and thorough development and application of data resources, maximizing the economic value and growth potential of data factors. Based on this, the design of a data property rights system should consider the following points.

Firstly, data property rights should be allocated to the party that can maximize the value of data. This ensures that they have property rights centered on residual rights of control and residual claim rights, which can be further invested in data development and utilization.

Secondly, considering the non-competitive nature of data, the design of data property rights should be conducive to promoting open access, circulation, trading, and sharing of data, thereby maximizing its total social value.

Thirdly, data-driven innovation is an advanced form of realizing the value of data, and the data property system should provide a sustained and sufficient data foundation and strong innovation incentives for data-driven innovation, thereby promoting the innovative development of the digital economy.

Separation of rights

The Opinion innovatively proposed a structural separation system for data property rights, representing a major institutional innovation that adapts to the development of the digital economy. Consumers are owners of original data, and personal original data belongs to individuals. Data processors need to obtain consent for the collection, utilization, and disposal of personal original data, so that its privacy and security are protected. Data processors hold derived data following collection, cleaning, and processing. They have the right to hold data resources that have been collected at a higher cost. They also have the right to process and use data, innovate and operate business models using big data, and offer data products formed after processing and trade in the data market. The structural separation system of data property rights emphasizes the ownership and use of data factors by rights holders rather than exclusive possession, which will greatly promote the circulation, transaction, and reuse of data factors.

Meanwhile, the Opinion also pointed out the necessity to promote the reasonable tilt of data factor returns towards creators of data value and usage value, strengthen the incentive orientation based on data value creation and value realization, and effectively stimulate the value creation of data development and utilization while ensuring the full use of data factors.

The implementation of the data property rights system adopts a classification design based authorization mechanism for property rights confirmation. The overall idea of data property classification design is to promote the classification, gradation, and authorization of public data, corporate data, and personal data.

Data property rights are limited property rights that are subject to certain governance rules. Data property rights holders not only have corresponding data rights but also fulfill necessary responsibilities and obligations. Therefore, the data property rights system should establish an incentive-compatible governance system that reasonably balances the rights and interests of different stakeholders, better promotes value co-creation and revenue sharing, and enables all parties to better share the fruits of the digital economy.

Tang Yaojia is a professor from the China Institute of Regulation and Public Policy Research at Zhejiang University of Finance and Economics.