August 18, 2026, (Inside AI) — A U.S. congressional advisory body warned Tuesday that China's systematic collection and commercialization of domestic data could hand Beijing a measurable edge in the global AI race. The U.S.-China Economic and Security Review Commission said China treats data as a strategic national asset, using it to power AI systems for business, autonomous vehicles, humanoid robots, and military applications.
The commission's report, released Tuesday, argues that while major U.S. AI firms have largely exhausted the open internet for training language models, China is gathering proprietary enterprise, operational, and physical-world data that cannot be scraped from public sources. That data is critical for embodied AI, systems that operate in the physical world, such as robots used in manufacturing and defense.
China's National Data Administration did not immediately respond to a faxed request for comment outside of working hours.
Data as the New Factor of Production
Beijing has elevated data to a core factor of production alongside land, labor, capital, and technology. In 2023, it established the National Data Administration to oversee nationwide data standardization and classification, aiming to build a unified national market for data trading. Chinese firms have begun listing proprietary datasets on regional data exchanges in Shanghai, Shenzhen, and Beijing.
The report highlights China's advanced manufacturing and industrial robotics ecosystems as a vast source of high-quality data for embodied AI. This gives China a potential advantage in developing robotics software for both commercial and military uses, a key symbol of Beijing's top-down innovation push.
Mike Kuiken, the commission's vice chair, said in an interview:
"Over the last half decade, China has been able to consolidate data, find ways to label it and refine it, and hoover up new data and make sure it's quickly made available to entities," Mike Kuiken, Vice Chair, U.S.-China Economic and Security Review Commission
He added:
"It has the benefit of advancing their innovation ecosystem, and it has the benefit of enhancing the control of the (Chinese Communist) Party." Mike Kuiken, Vice Chair, U.S.-China Economic and Security Review Commission
Regulatory Tightening Creates Compliance Burden
China has tightened regulatory oversight of cross-border data transfers in recent years, leading to widespread compliance issues for foreign multinational firms. To comply, firms had to further localize their China subsidiaries and separate China customer data from global operations. Beijing has since introduced limited exemptions for some firms.
The report warns that U.S. firms operating in China "risk running afoul of China's strict data and cyber governance regimes." This regulatory environment effectively forces data localization, concentrating more valuable data within China's borders and under state oversight.
Kuiken said the commission's top recommendation is for Congress to develop a national data strategy. He said:
"We recommend that U.S. Congress think about a national data strategy and how the U.S. government could treat data as an economic asset as our number one recommendation," Mike Kuiken, Vice Chair, U.S.-China Economic and Security Review Commission
The report lands as Washington debates AI competitiveness and export controls on advanced semiconductors. China's data strategy adds another layer to the rivalry, one that is harder to counter with traditional trade tools. Data is generated domestically, and its value compounds with scale and standardization.
The commission's findings suggest the AI race is no longer just about compute and algorithms. It is also about who controls the raw material of the digital economy. China's approach treats data as infrastructure, while the U.S. lacks a comparable federal framework.
