Too good to be true? China's new conceptual scheme for data property rights

This article assesses the implementation of China's new data property rights framework, which grants actors engaged in data collection, processing, and commercialisation three distinct rights: to hold data resources, to process and use data, and to operate data products. Compared with the EU and U.S., China's focus on data processors and an ex-ante regulatory design has led to this approach. The New Scheme intended to lower information costs and expand data market. Whether this design works in practice remains uncertain. Building on Smith and North's view, this paper use local legislation and judicial decisions as indicators of how the New Scheme takes effect, and develops a transaction cost framework that covers information, bargaining, and enforcement costs. Using 47 local regulations, 33 administrative rules, nine representative judicial cases, five industry reports and four interviews in exchanges, we show that the New Scheme has produced two coexisting trading pathways. On-exchange transactions, supported by local legislation and state-run data exchanges, follow the Scheme more closely and reduce information costs, and their trading volume has grown rapidly. Off-exchange transactions, however, still dominate total trading volume and continue to expand. This pattern is driven by high entry barriers to exchanges, unclear delimitation of the three rights in local legislation, and courts' comparable protection of unregistered data. These factors limit reductions in bargaining and enforcement costs for on-exchange trade. We propose that New Scheme calls for gradual judicial adjustment rather than immediate codification, and that courts can adopt a more proactive stance. We also recommend improvements to market institutions, including making transactions to on- or off-exchange depending on data characteristics, a non-mandatory registration within exchange and a clearer separation of the three decomposed rights.