China's Giant New Gamble with Digital IDs

They could change its internet for good and turbocharge AI efforts.

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It was in 1984, of course, that police stations in China started issuing national ID cards to those over the age of 16. Citizens still need them to travel, pay taxes or gain access to public services.

Now the Communist Party wants to cross another Rubicon. On July 15, the government will launch "digital IDs" for use on the internet, shifting responsibility for online verification from private firms to the government.

This is a potentially enormous step change in the state's control over data. It augments China's radically different approach to managing and surveilling the digital lives of its citizens. And it may alter who captures the profits generated from the online economy and even change the evolution of artificial intelligence in China.

Under the new scheme people obtain a digital ID by submitting a raft of personal information, including scans of their faces, to the police via an app. They can then use it to register and log in to other apps or websites. A pilot went live a year ago and six million people signed up.

Currently voluntary, it may not remain so for long. Officials and state-run media are pressing citizens to sign up in the name of "information security". China's 1.1 billion internet users are in their sights. Some US$1.3 trillion (S$1.7 trillion) of market capitalization is tied up in the big Chinese internet firms that cater to this huge customer base, from Alibaba to Meituan and Tencent.

The state already tries to maintain a tight grip on what happens on the web. The government maintains the "great firewall" through its control over telecom infrastructure. It blocks hundreds of thousands of sites, including foreign news outlets, search engines and social media.