A U.S. congressional advisory body has concluded that China is converting data into a strategic national asset to propel its artificial intelligence and technology objectives, a move the commission says could yield an advantage over the United States in the AI competition.
The U.S.-China Economic and Security Review Commission stated in a report released on Tuesday that Beijing is "marshalling data to drive productivity ... (and) improve its intelligence collection and military capabilities." The report argues that China is deliberately commercializing and monetizing data across its economy to support AI deployment.
China’s National Data Administration did not immediately respond to a faxed request for comment outside of working hours, the commission noted.
According to the report, major U.S. AI firms have in large part tapped the open internet as a primary source for language model training, but that reservoir has been largely exhausted for new gains. In contrast, China is actively gathering domestic "enterprise, operational and physical-world data that cannot be scraped" from public web sources. The commission emphasises that such data are particularly valuable for training AI systems intended for commercial applications, autonomous vehicles and humanoid robots.
The report highlights China’s advanced manufacturing and industrial robotics ecosystems as rich sources of high-quality data for embodied AI - systems that operate in the physical world, such as robots. The commission suggests this access to real-world operational data could give China a potential advantage over the United States in developing robotics software for both commercial and military uses.
"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, said in an interview. "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 documents regulatory changes Beijing has enacted in recent years. China has tightened oversight of cross-border data transfers, producing widespread compliance challenges for foreign multinational companies operating in the country. To comply with China’s cross-border data regulations, many foreign firms reportedly localised their China subsidiaries and segregated China customer data from their global operations, although the commission notes Beijing later introduced limited exemptions for some firms.
"U.S. firms operating in China risk running afoul of China’s strict data and cyber governance regimes," the report said, pointing to the legal and operational exposures companies face under the tightened rules.
China has elevated data to a central "factor of production" alongside land, labour, capital and technology, the commission said. The government established the National Data Administration in 2023 to oversee national data standardisation and classification, and to advance the construction of a unified national market for data trading.
Beijing’s broader economic strategy, the report states, includes efforts to commercialise data within the digital economy and to push AI into all industries. The government aims to standardise data assets across critical sectors - including manufacturing, transport, finance and healthcare - and Chinese companies have started listing proprietary datasets on regional data exchanges in cities such as Shanghai, Shenzhen and Beijing.
The commission concluded with a policy suggestion for U.S. lawmakers. Kuiken said: "We recommend that U.S. Congress think about a national data strategy and how the U.S. government could treat data as an economic asset as our number one recommendation."
Summary
The U.S.-China Economic and Security Review Commission reports that China is systematically commercialising domestic data, standardising datasets and building infrastructure to trade and deploy those data across industries, which may confer advantages for AI development in sectors such as robotics and defence. The report also raises compliance risks for foreign firms under China’s tightened cross-border data rules and urges the U.S. to consider a national data strategy.
Key points
- China is treating data as a national strategic asset and is commercialising and standardising it to accelerate AI deployment.
- China’s collection of non-scrapable domestic enterprise, operational and physical-world data supports training of AI for business, autonomous vehicles and humanoid robots - areas where embodied AI requires high-quality real-world datasets.
- Regulatory tightening on cross-border data transfers has forced foreign firms to localise operations and separate China customer data, creating compliance burdens for U.S. and other multinational companies.
Risks and uncertainties
- Commercial and military AI development could be advantaged by China’s access to high-quality, hard-to-scrape domestic data - a factor that may affect technology, defence and robotics sectors.
- Foreign multinationals face compliance risk under China’s strict data and cyber governance regimes, impacting sectors with significant China operations such as cloud services, manufacturing and finance.
- Efforts to create a unified national market for data and the listing of proprietary datasets on regional exchanges raise questions about market access and competition for firms relying on cross-border data flows.