Report warns: China's AI data commercialization to boost nation's trade, intel collection, military

Communist China is commercializing and monetizing data sets in ways designed to boost both commercial trade and intelligence collection and military capabilities, according to a congressional China commission report.

The ruling Chinese Communist Party regards its data collection as a strategic resource and is now using data as a factor of production.

“Beijing’s ambitions extend beyond economic growth. It is marshaling data to drive productivity, power its AI and technology goals and improve its intelligence collection and military capabilities,” the report by the U.S.-China Economic and Security Review Commission warns.

The commission report reveals the effort to create a market for its data includes a bid to set global standards for such trade in ways controlled by the CCP.

Unlike American artificial intelligence companies that have largely exhausted the open internet for training AI data, China is gathering valuable “enterprise, operational and physical-world data that cannot be scraped,” the report said.

That information is valuable for training AI tools for business, autonomous vehicles and humanoid robots, and could give Beijing an advantage over the United States in developing robotics software for both military and commercial use, the report said.

“Over the last half-decade, China has been able to consolidate data, find ways to label it and refine it, and Hoover up new data and make sure it’s quickly made available to entities,” Mike Kuiken, the commission’s vice chair, told Reuters.

“It has the benefit of advancing their innovation ecosystem, and it has the benefit of enhancing the control of the (Chinese Communist) Party.”

The report said China now views data as a “factor of production” similar to land, labor, capital and technology. In 2023, Beijing set up a National Data Administration organ to direct nationwide data standardization that seeks to create a national market for data trading.

Data is one of three major components of advanced artificial intelligence, along with computing power and software and algorithm capabilities.

Most U.S. technology experts say the United States leads China in the AI race in terms of computing power and algorithm development, but China is regarded as ahead in data collection.

The commission said the U.S. government has no similar policy toward data and Congress should consider a national strategy that regards data as an economic asset.

Allowing China to set global standards in a data trade would boost Beijing’s state-controlled approach to data and give its companies an advantage.

“Congress should consider how the United States, working with allies and partners, can lead on data interoperability and transaction standards rather than ceding that ground to China,” the report said.