Online with a passport. Digital IDs have been launched in China.

On July 1, the Chinese government launched digital identity cards for use on the internet, transferring the responsibility for online identification of citizens from private companies to the state. This is reported by The Economist.

The step may affect the distribution of profits from the internet economy and change the development of artificial intelligence in the country, notes the magazine.

According to the new scheme, users transmit personal information and scan their face to the police through the app. They then receive the ability to access apps and websites through a unique identifier.

The pilot version of the ID system was launched a year ago, with 6 million people joining it. Participation is voluntary, however, officials and state media are urging citizens to connect to it under the slogan of "information security."

The Chinese government seeks to exert strict control over everything that happens on the internet, the publication emphasized. 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 restricts the information about users that can be transmitted to internet resources. Users will be able to log in to websites and applications without disclosing personal data. Technically, they only provide a private stream of characters.

Platforms will still be able to censor users and report violators, but the personal data itself is with the police.

This scheme is designed to protect the citizens of China who have faced mass spam from scammers due to the sale of personal information to third parties.

Critics of the initiative fear an increase in surveillance. For example, the police will be able to compile a list of all the websites and applications that each person uses. In addition, data from digital identity cards could be connected to a new, more comprehensive online monitoring system in the future.

The professor of criminal law at Tsinghua University's Law School, Lao Dunyuan, wrote on Weibo that the system is a "trick." Then her comments disappeared, and her account was temporarily blocked.

Security and Earnings

In the long term, digital identifiers are part of a much larger initiative for strict centralized control over vast data flows. This is partly due to national security considerations. In the wrong hands, such as foreign spies, personal information can be used for misinformation campaigns, cyberattacks, or training AI models to gather data on the population.

Economic interests also lie in the realm of "digital dictatorship." Data is a factor of production alongside labor, capital, and land. Thus, local authorities have created data exchanges for trading between government institutions, enterprises, and private companies. In Shenzhen, firms can purchase information on how consumers use electricity.

A national data exchange is under development. In June, the State Council announced new rules aimed at preventing the isolated storage of information by competing government agencies.

AI Development

Centralized data streams can significantly accelerate China's initiatives in artificial intelligence. Companies from the PRC are banned from purchasing advanced AI chips developed in the USA. However, they can still try to find a competitive advantage by training their algorithms on higher quality information, believes Taiwanese technology investor Lee Kai-fu.

One of the areas where data arrays have already helped Chinese companies gain a leading position is facial recognition technology. This is all thanks to the millions of surveillance cameras installed by authorities across cities.

Risks

In addition to 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. Moreover, in 2022, a hacker stole 1 billion personal records from the Shanghai police by hacking an unsecured database.

Such scandals could alarm Chinese citizens regarding government programs; however, vigilant local tech companies intervened and censored reports of the theft, The Economist emphasized.

Let us remind you that in March 2025, after the rise in popularity of the AI models DeepSeek, some employees of the startup had their passports confiscated and were prohibited from traveling abroad freely.