On July 15th, the Chinese government will launch digital identity cards for online use, shifting the responsibility for citizens’ online identification from private companies to the state. This development is reported by The Economist.
The move could impact the distribution of profits from the internet economy and alter the development of artificial intelligence in the country, the magazine notes.
Under the new scheme, users will submit personal information and facial scans to the police via an app. They will then be able to access apps and websites using a unique identifier.
A pilot version of the ID system was launched a year ago, with 6 million people joining. Participation is voluntary, but officials and state media encourage citizens to join under the banner of “information security.”
The Chinese government aims for strict control over all internet activities, the publication highlighted. It supports the Great Firewall, which blocks hundreds of thousands of websites, including foreign news agencies, search engines, and social networks.
The Chinese ID system also limits the information shared with internet resources about users. Users will be able to log in to sites and apps without disclosing personal data. Technically, they provide only a private stream of characters.
Platforms will still be able to censor users and report violators, but personal data will remain with the police.
This scheme aims to protect Chinese citizens who have faced mass spam from fraudsters due to the sale of personal information to third parties.
Critics of the initiative fear increased surveillance. For instance, the police could compile a list of all websites and apps each person uses. Additionally, data from digital IDs could be integrated into a new, more comprehensive online monitoring system in the future.
Professor of criminal law at Tsinghua University Law School, Lao Dunyan, wrote on Weibo that the system is a “ruse.” Her comments later disappeared, and her account was temporarily blocked.
Security and Profit
In the long term, digital identifiers are part of a much broader initiative for strict centralized control over vast data flows. This is partly driven by national security considerations. In the wrong hands, such as foreign spies, personal information could be used for disinformation campaigns, cyberattacks, or training AI models to gather data about the population.
Economic interests also play a role in this “digital dictatorship.” Data is a production factor alongside labor, capital, and land. Local authorities have created data exchanges for trading between government agencies, enterprises, and private companies. In Shenzhen, firms can purchase information on how consumers use electricity.
A national data exchange is in development. In June, the State Council announced new rules aimed at preventing isolated data storage by competing government departments.
AI Development
Centralized data flows could significantly accelerate China’s AI initiatives. Chinese companies are prohibited from purchasing advanced AI chips developed in the US. However, they can still attempt to gain a competitive edge by training their algorithms on higher-quality information, according to Taiwanese tech investor Lee Kai-fu.
One area where data arrays have already helped Chinese companies reach leading positions is facial recognition technology, thanks to millions of surveillance cameras installed by authorities across cities.
Risks
Beyond the risks of total surveillance, the question of proper management of personal information remains open. Officials in China receive low salaries and may sell valuable information in search of income. Additionally, in 2022, a hacker stole 1 billion personal records from Shanghai police by hacking an unsecured database.
Such scandals could raise concerns among Chinese citizens about government programs, but vigilant local tech companies intervened and censored reports of the theft, The Economist noted.
Back in March 2025, after the rise in popularity of AI models, DeepSeek, some employees of the startup had their passports confiscated and were banned from freely traveling abroad.