Fundamental Challenges, Differentiated Approaches and Prospects for Making Rules for Global Digital Economy

We are now at a crucial moment of developing digital economy. Countries around the world are striving to strike a balance between enabling innovation and enhancing regulation. While digital economy， which is cross-border in nature， calls for higher-level regulatory integration and network effects， digital technology-related security issues have caused widespread concerns and regulation remains fragmented or even contradictory. The fundamental conundrum facing global digital economy rule-making is the trust deficit and the digital divide. In such a context， differentiated approaches towards global digital economy rule-making are adopted. In the meantime， we are also witnessing a trend of converging goals and priorities of digital economy governance. As countries are reaching consensus on more aspiring digital governance， the world is embracing opportunities for global rule-making.

Framework and Core of Global Digital Economy Rules

The concept of “digital economy” covers an extensive range. As digitalization is taking place and exerting effects across almost all sectors of the economy， making it difficult to quantify the digital economy. The United States Bureau of Economic Analysis proposed that the digital economy has three components： Digital-enabling infrastructure， physical materials and interconnectivity arrangements， “e-commerce” or all purchases and sales of goods and services that occur over computer networks， and paid digital services or other paid services related to computing and information. The Organization for Economic Cooperation and Development （OECD） has proposed a quite similar concept， believing that the digital economy includes digitally-driven infrastructure， digitally-ordering transactions and digitally-delivered products. Countries such as Canada and Australia adopt similar standards to those of the United States and OECD when measuring the digital economy.

In view of this， digital economy rules generally have three components： digital infrastructure， mobile devices and interconnectivity standards-related rules， which further include administrative licensing， qualification requirements， industrial standards， communication standards， investment and mergers and acquisitions， standards for operating fees， competition and anti-monopoly; E-commerce-related rules， including digital contracts， digital signatures， customs and border inspections， taxation， quality and consumer protection; digital delivery-related rules， including online signing and execution of contracts， cross-border data transmission and storage， intellectual property， content review， source code and open source.

Many components of the digital economy rules still fall within the scope of domestic governance and policies and thus global governance mainly involves cross-border digital markets and behaviors. Therefore， the global digital economy rules within the scope of global governance mainly focus on the following aspects：

The first is digital sovereignty and security. Digital sovereignty refers to the power of a country to own and control its digital hardware， software and data resources. Digital sovereignty corresponds to a country’s control over people and physical materials within its jurisdiction， but is much more complex than traditional territorial and personal jurisdiction. Resisting digital attacks and safeguarding digital security become issues gaining more attention. The concept of the right to digital development has emerged in recent years. This digital sovereignty-related concept refers to the right of developing and least developed countries to engage in the digital economy and develop digital capabilities.

The second is data flow and application. Firstly， data classification regulation is adopted， in which data is generally classified as sensitive or critical data and non-critical data. Stricter regulation is imposed on the former， with more restrictions on the collection， use， protection， and cross-border flows of such data， while less restrictions are placed on the latter. Secondly， rules for cross-border data flows are in place， which involve classification license， security frameworks and requirements for local storage. As cross-border data flows require cross-border regulation， such rules can be found in bilateral and regional agreements. Lastly， there are data-related responsibilities， including the responsibilities of big data platforms， disclosure of government public data， anti-monopoly measures and consumer protection.

The third is cross-border e-commerce. There are rules related to cross-border transactions of goods and services placed in electronic form， including electronic contracts， electronic signatures， customs and border inspection-related processes， intellectual property rights and consumer protection. At the international level， e-commerce-related rules are the most mature， with a variety of rules related to mutual recognition of standards， customs facilitation and cooperation as well as capacity building.

The fourth is cross-border digital transfer and delivery. Unlike e-commerce， digital transfer and delivery are cross-border services of digital content in isolation from any physical medium， in such forms as the provision of cross-border digital services and cross-border digital consumption. International rules in this field now focus on taxation， including tariffs and income tax. Within the WTO framework， tariffs on digital transfer is mainly exempted. In terms of income tax， some countries have already started levying digital taxes based on the “place of service”.