Author：Fu Xiwen, Zheng Lei
Abstract: In recent years, many localities in China have set up “on-exchange” (venue-based) data trading institutions. In practice, however, their operating performance has been broadly disappointing. With little genuine transaction volume, some institutions inflate figures by “transferring” or “padding” transactions to create the appearance of activity.
This study finds that today’s data trading market suffers from a form of market failure rooted in market immaturity, which manifests in five respects. First, data transactions are ancillary: they are often embedded in firms’ core business activities, making them difficult to separate and define as standalone business operations. Second, data products are non-standardized, which prevents their value from being assessed using a uniform method. Third, transaction targets involve multiple rights holders and are easily replicable, making it hard to reach agreements and form an effective market. Fourth, information asymmetry between buyers and sellers raises the costs of information search, coordination, and negotiation. Fifth, data transactions may generate negative externalities, which dampens market participants’ willingness to engage.
Against these market failures, the newly established on-exchange data trading institutions have not effectively corrected immaturity-driven market failure. Their necessity has therefore been increasingly questioned, resulting in an awkward situation: data trading centers need data trading, but data trading does not necessarily need data trading centers. The reasons mainly fall into three categories: deviations in the original objectives of institution-building; structural weaknesses in institutional positioning and service capacity; and functional overlap with existing market intermediaries.
A key question follows: is a designated on-exchange trading institution a genuine market demand, or is it driven by the venue’s own interest claims and self-construction?
The article offers four policy recommendations. First, break down the binary boundary between on-exchange and off-exchange markets. Developing the data factor market is not equivalent to building trading venues; the principle should be clarified that “there is no inherent on/off distinction—any compliant arrangement is part of the market.” Second, explore diversified forms of data circulation. Data trading should not be treated as the only pathway; instead, multiple compliant models should be encouraged to develop in parallel. Third, reposition data trading institutions by moving them away from being the sole “place where transactions occur” and toward becoming service platforms that facilitate data circulation. Fourth, transform the role of government from directly stepping in to “push” transactions to focusing on the provision of foundational institutions and public data supply, thereby providing a solid institutional base and a supportive ecosystem for cultivating and developing the data factor market.
Keywords: data as a factor of production; data circulation; data trading; data trading institutions; data market; market failure
Journal：E-Government (CSSCI), First Published, October.
Publish date：2025/10/11
