A photo shows a night view of the CBD area in downtown Beijing. [Photo/Agencies]

High hopes have been put on the recently founded Beijing International Big Data Exchange (BIBDE), which is part of the Beijing pilot free trade zone. It will act as data trustee enabling transactions and business models that would otherwise have been unprofitable or unfeasible for companies.

First, the big data exchange does not trade data, but the value of data. The essence of the digital economy is to release the value of data, regardless of whether the data is traded or not. The exchange is essentially a data management platform encompassing the entire data value chain, enabling innovative data-centric services such as data asset pledging, data asset insurance, data asset guarantees, and data asset securitization. The digital economy will prosper by exploiting the value of data, and that's what the BIBDE will serve. With technologies such as blockchain and multiple-side security technologies, it allows the value of data to be traded without trading the data itself.

Second, the BIBDE will start from government data, and its business will be centered on non-personal data. As the domestic data-related laws and regulations are yet to be improved, it is much easier and faces less resistance by starting with governmental data.

Third, the BIBDE is a public technological service platform with support from the local government. Currently many internet giants have accumulated huge amounts of data with their advantages as platforms, and they are entering new sectors such as finance, medicine, community group buying, retail with these data. Some giants have already posed potential challenges to the stability of the financial system.

The central government has realized this and clearly vowed to curb monopolies. An effective way will be to build big data exchange platforms for public services, so as to better supervise the internet giants' platforms and regulate the whole big data sector.

That's why the BIBDE is expected to play a major role in China's digital economic development. However, we must realize that the BIBDE faces many bottlenecks in further development.

First, laws about data need to be improved. Who owns the data? Who can use it and who can profit from its use? For these questions, there is no answer in the law. That's why the current efforts of big data value exchange is considered "pioneering" and it is hoped that it will assist the regulating efforts.

Second, a consensus is yet to be reached among governmental agencies, technological companies and research institutions, which is also a bottleneck to legislation. Standards are obviously needed for the sector.

Third, cross-border data flows and regulations also pose a challenge. China needs to more deeply participate in the formulation of global data laws, regulations and standards, so as not to fall behind.

－LIU BIN, A SENIOR FINANCIAL RESEARCHER AT PUDONG ACADEMY OF DEVELOPMENT& REFORM