Shenzhen's Tech Hub Status Turbocharged By Beijing's Plan To Introduce Digital Yuan, Big Data Protections - TheStreet

Shenzhen's Tech Hub Status Turbocharged By Beijing's Plan To Introduce Digital Yuan, Big Data Protections

Dubbed the Silicon Valley of China, Shenzhen was the original test bed for the country's reform and is now home to many leading Chinese tech companies Shenzhen will also be a pilot city for a programme aimed at protecting intellectual property rights (IPR)
Author:
Publish date:

Shenzhen's Tech Hub Status Turbocharged By Beijing's Plan To Introduce Digital Yuan, Big Data Protections

Pilot testing of the digital yuan, establishing a data trading platform and introducing simpler residency rules for foreign talent are some of the "gifts" the central government has given tech hub Shenzhen as it celebrates the 40th anniversary of being declared China's first special economic zone.

Jointly issued by the Chinese Communist Party and the State Council on Sunday, the measures targeting the tech sector are an important part of Beijing's 2020-2025 plan for the city, which include pilot reforms in areas from finance and energy to education and transport.

Dubbed the Silicon Valley of China, Shenzhen was the original test bed for the country's reform and market opening and is now home to many leading Chinese tech companies, including gaming giant Tencent Holdings, telecoms national champion Huawei Technologies and drone maker DJI - all of which are facing headwinds amid a protracted US-China tech war.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

The announcement of the measures comes as Chinese President Xi Jinping visits the southern metropolis this week. Beijing's plan doubles down on hopes that Shenzhen will become a global leader in technology and finance and a showcase for Xi's vision of an ideal Chinese society.

"Xi's visit to Shenzhen and the unveiling of the plan are aimed to encourage the development of the tech industry," said Dan Wang, chief economist for Hang Seng Bank.

"The central government has always wanted to use these policies to soothe the nerves of tech companies so not to be scared by America's policies [towards some Chinese companies]."

Shenzhen will establish a "data trading market" and "take the lead" in exploring new mechanisms for data property rights protection and utilisation, and establish a data privacy protection system, according to the document, which did not elaborate on the kind of data covered by the plan.

Xi Jinping urges push towards hi-tech independence

Wang Zhicheng, associate professor of finance at the Guanghua School of Management at Peking University, said China's big data sector has enjoyed rapid growth thanks to its huge population but there was an absence of rules to regulate data collection.

"Beijing's plan to encourage exploration of new laws in Shenzhen will allow systems and regulations in this field to be set up to safeguard the development of big data," he said.

Shenzhen will also be a pilot city for a programme aimed at protecting intellectual property rights (IPR), including establishment of a compensation system for IPR infringements.

Wang noted that IPR protection was one of the highlights of the new plan. "Without proper protection, we will lose the motivation to develop authentic technology and can only achieve incremental changes," he said.

Beijing's plan also includes support for pilot testing of the sovereign digital yuan, with the city's government offering residents 10 million yuan (US$1.47 million) worth of digital currency via a lottery last weekend.

Shenzhen will also help foreign talent obtain Chinese permanent residence permits and arrange for professional qualification examinations to make it easier for Shenzhen-based companies to hire and retain foreign talent.

Foreign-funded Chinese firms can sell CDRs on Shenzhen's ChiNext market

"Shenzhen needs a higher-quality talent pool," said Wang, adding that the city cannot compete with Beijing and Shanghai in terms of quality of life as it lags in international dining culture and quality of international schools.

A new "dual-track system" for scientific investment, which will fund applied science conducted by start-ups and established enterprises as well as fundamental research for labs and research organisations, would be a major boon for the city, which has strived to improve its basic research capability, said Guo Wanda, executive vice-president of the Shenzhen-based think tank China Development Institute.

While Shenzhen is known for its warp speed when it comes to product development in mobile games, 5G technology and consumer electronics, the scarcity of universities and higher education institutions has meant fundamental research is a weak link for the city.

Shenzhen is already a host city for key tech infrastructure, including China's first national gene bank and a national supercomputer centre. However, it ranks well behind Beijing and Shanghai when it comes to government support in basic science, with 90 per cent of the research institutions in the city funded by private enterprises.

"Beijing's funding for the 'dual-track system' will be important for the research and development of fundamental science in the city because it requires billions of dollars in investment to build labs and scientific facilities," Guo said.

Do China's Shenzhen plans mean a Greater Bay Area back seat for Hong Kong?

One ambitious Shenzhen project is Guangming Science City, a 170 billion yuan (US$25 billion) government funded initiative, which has the goal of becoming a world-class cluster of large-scale scientific facilities in information technology, bioscience and materials science.

Once a sleepy fishing village, Shenzhen's rise to a major tech hub of 12.5 million people is symbolic of the extraordinary growth in China's economy after the late paramount leader Deng Xiaoping opened the country to the world four decades ago.

Starting in 1979, Shenzhen's gross domestic product grew at an average annual rate of 21.6 per cent, reaching 2.69 trillion yuan (US$396.78 billion) last year.

More from South China Morning Post:

Read the original article on South China Morning Post. For the latest news from the South China Morning Post download our mobile app. Copyright 2020.