Zhou Li, Assistant Dean of CKGSB Authors

Looking to the Future

June 08, 2021

The pandemic has propelled the idea of digital privacy into sharp focus. What is the prognosis for global digital governance?

Even as much of the world continues to reel from the aftermath of the COVID-19 pandemic, China has emerged from it faster and stronger than any other major economy, at least till now. In line with the International Monetary Fund’s prediction, China was the only economy to achieve growth amid the global health crisis, with a year-on-year gross domestic product (GDP) growth of 2.3% in 2020.

While media reports largely attribute China’s success to its strict central control, the role of digitalization in its pandemic response also deserves attention. In particular, the pervasiveness of smartphones and the high level of digitalization of social functions enabled the government to monitor and control the activities of the population to a degree not seen elsewhere. To the extent that it is a trade-off between individual privacy on one hand and public safety and efficiency on the other, China has clearly made its choice.

Interestingly, privacy concerns were not widespread in China even before the pandemic. From the early stages of the digital revolution, the Chinese people accepted the advantages and efficiencies that come from digitalization and were less concerned about data privacy compared to other countries. There is a consensus that collective security trumps issues of individual privacy. This is nothing new—the idea that collective interests transcend the interests of the individual has been a part of the culture stretching back more than 2,000 years. Since unification under the Qin Dynasty in 221 B.C., China has adopted a centralized bureaucratic system for maintaining law, order and social stability. In addition, Confucian values of collective harmony and the common good have also been interwoven into the social fabric of the nation since the Han Dynasty, which was around the same time as when ancient Rome existed.

As a result, the roll-out of blanket digitalization measures has been extremely efficient: users are tolerant toward the mobile networks and apps that play an integral role in their daily lives. Unlike Western countries, one doesn’t have the choice of opting out. In Europe and the United States, people are free to decide whether they allow apps to track their behavior, but in post-pandemic China, unless the government-approved health code displays green on your mobile phone screen, you can do almost nothing.

While drastic government measures for tackling the health crisis in China may have exposed individuals to data collection to a greater degree than other countries, the increase in personal data collection began well before the pandemic, as e-commerce and digital entertainment started to play bigger roles in people’s lives. This is not only true of China, but also other countries around the world. Social distancing measures during the pandemic have further accelerated this trend.

Nowadays, most e-commerce platforms and mobile applications require user data in exchange for access to core functionalities; you either give away your personal data or don’t use the apps. In China, the US and other major economies, online services are mostly provided by a small number of large companies. A recent report by the United Nations Conference on Trade and Development identifies China and the US as the top B2C e-commerce markets in the world by sales value. The report also highlights how a small number of global platforms, such as Alibaba and JD.com from China and Amazon from the US, have so far managed to dominate the e-commerce markets of many countries.

In the US, prominent platforms have been spending massive amounts on lobbying the government to stall any unfavorable policies and to advance their own interests. At the start of this year, Facebook disclosed that it had spent $19.68 million on lobbying in 2020—a 17.8% increase over its spending in 2019 and the highest amount among American tech giants such as Amazon, Apple, Google and Microsoft. Meanwhile, Amazon’s lobbying expenditure also grew to $17.86 million in 2020—a 10.7% jump over the previous year. Against this backdrop, it is important to continue observing the changing approaches of China and the US toward digital governance, especially in relation to the activities of multinational platforms with global influence.

However, while people may be more tolerant of personal data collection in times of crisis, this may not always remain the case. In China, as the educated middle-class population continues to expand, consumer awareness of data privacy issues will increase. Mobile apps will, in turn, face increasing pressure from both consumers and tightening government regulations to rethink their data collection practices vis-à-vis consumer rights protection in the long run.

Beijing appears to be putting the behavior of influential tech players under the spotlight, especially concerning their use of consumer data to achieve competitive advantage and market dominance in an increasingly digitalized economy. According to a government summary on the regulation of personal data collection by mobile apps, over 2,300 apps were ordered to make changes to their data collection practices in 2019. In October 2020, the National People’s Congress also released the draft version of the Personal Information Protection Law for public comment, thus confirming the government’s intention to ramp up regulations on data collection. Beijing’s resolve to strengthen personal data protection is also demonstrated in the latest list of apps released by the Cyberspace Administration of China, which identified 33 apps as violators of new data privacy rules which came into effect on May 1, 2021.

Such regulatory measures would be harder to implement in Western countries such as the US, even though Western societies are more sensitive to personal privacy issues. This is largely due to the decentralized approaches that Western governments have traditionally taken toward market regulation. As highlighted in recent headlines about Facebook’s user data leak, large tech companies in the West have been allowed to amass considerable influence with little interference or restriction on their data collection practices. Although the Federal Trade Commission’s penalization of YouTube in 2019 for collecting the personal data of underaged users shows that there are mechanisms to govern digital privacy in the US, the effectiveness of these measures may be called into question as digital technologies become increasingly entrenched in people’s lives.

Debates about data privacy in the age of digitalization have been going on for some time. However, the intensity of personal data collection during the COVID-19 pandemic has raised further questions about the deepening impact of digital technologies across the world. As the ongoing health crisis accelerates the growth of the global digital economy, the approaches of leading economies—especially China and the US—toward personal data protection and digital governance also warrant further discussion. While China and the US will address digital governance in different ways at the global and national levels, it wouldn’t hurt if both sides learned from each other in the process. Global digital governance could become an area where China and the US can work together, in addition to other critical global issues such as climate change.

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