Data policy push + SME financing + Green hydrogen

In this MERICS China Industries Brief, we cover the following topics:

Data policy push: China is set on scaling up its data industry
China wants better financing for its strategic and high-tech SMEs
China wants to decarbonize its hydrogen industry, relying on state-owned enterprises
China wants to lure back foreign investors, but might not offer enough in return
China wants to make its pharmaceutical sector more competitive, but major results are not to be expected

1. Data policy push: China is set on scaling up its data industry

At a glance: The National Development and Reform Commission (NDRC) and five other departments have issued guiding opinions for the development of China’s data industry. Examples are data collection, data computing and storage, data trading, data security and the construction of data infrastructure. Key aspects include:

Building a digital economy and accelerating the construction of a digital China
Achieving an average annual growth rate in the data industry of more than 15 percent by 2029
Cultivating “a number of” internationally competitive data companies by 2029
Promoting the circulation and trading of data, for example through data exchanges and third party-platforms

MERICS comment: The guiding opinions show China increasingly views data as a source of growth as well as a means of achieving across-the-board industrial upgrading and modernization. The last few months have witnessed a significant policy push in this field, including opinions on utilizing enterprise data resources, a pilot program for the whole-process management of data assets, opinions on the development of the data-annotation industry, and guidelines for the construction of a national data infrastructure.

To realize the potential of data, it must be made accessible to economic actors who can create value from it. China’s government had been promoting data exchanges, digital marketplaces for the trading of data, but these efforts ran into problems over unclear data ownership, data pricing and poor protections for personal information. Beijing responded with reforms to promote legal clarity, tighter government control, more efficient data pricing and greater trust within the market. These seem to have produced some positive results. China’s data transaction market is expected to be worth USD 28.8 billion in 2025, up from USD 12.3 billion in 2022. However, the future success of China’s data exchanges is uncertain due to heavy state-involvement, limited private sector participation and doubtful profitability.

Crucially, by viewing data as a factor of production, Beijing employs it as a supply-side means to achieve productivity gains and boost its manufacturing sector. As a result, European actors may find themselves facing challenges to their competitiveness vis a vis Chinese firms.

Article: Guiding Opinions on Promoting the High-Quality Development of the Data Industry (国家发展改革委等部门关于促进数据产业高质量发展的指导意见) (Link)
Issuing bodies: NDRC, NDA, MOE, MOF, SAFR, CSRC
Date: December 30, 2024

2. China wants better financing for its strategic and high-tech SMEs

At a glance: The Ministry of Industry and Information Technology (MIIT) and four other departments launched their “One Month One Chain” promotion activities for small and medium sized enterprises (SMEs). The program runs from November 2024 till December 2025, with investment and financing activities organized around one industrial chain per month. The aim is to create an effective financing environment to meet the needs of strategic SMEs. This includes providing better access to equity, credit, insurance services, the promotion of mergers and acquisitions (M&As) and other kinds of restructuring to facilitate growth. Target SMEs include:

High-quality SMEs, which include “Little Giants” and “specialized, new” SMEs
SMEs at key supply chain nodes, which explicitly need to tackle new technologies, develop new products, and support the industrial chain
Other key SMEs, such as digital transformation SMEs or SMEs in strategic industry clusters