Report: China’s GDP Hinges On Data Privacy

A new report on China stated that if the country doesn’t start to work on improving issues like data privacy and intellectual property protection, it could lose out on 37 trillion yuan ($5.5 trillion) in growth opportunities in the next 10 years, according to CNBC.

The report — published by nonprofit Hinrich Foundation and based on research from AlphaBeta, an economics consulting company — revealed that China’s digital trade could contribute $5.5 trillion to the country’s economy. That number would be about one-fifth of Beijing’s estimated gross domestic product (GDP).

Konstantin Matthies, the engagement manager at AlphaBeta, said the potential growth is conditional, however.

“That estimate relies on free cross-border data flows for those opportunities,” Matthies told CNBC. “If you put in place things that will impede that, that number is going to shrink.”

The report gave China suggestions and a plan of action, including the adoption of the Asia-Pacific Economic Cooperation (APEC) Privacy Framework and other guidelines for how to protect people’s personal info put forward by the International Organization for Standardization (ISO).

China regularly blocks access to websites it thinks might be threats, like The New York Times, YouTube, Twitter and Facebook, as well as Google. The report also said China could help its growth by making it easier to understand what’s illegal and by having more transparent rules about intellectual property. Restricting access can either raise costs for Chinese digital companies or even make it impossible to function.

Blocks to sites can hinder productivity for businesses and foster a fearful environment, especially from businesses that worry they could simply be shut down by the government overnight.

Zhou Nianli, a professor at The University of International Business and Economics’ WTO research institute, said more needs to be done, especially in the areas of cross-border data flow.

The answer, Nianli said, lies in a balance between China and the United States — rather than a hard line or a black and white solution.