China Drafts New Restrictions For Online Gaming

Call of Duty Mobile

Draft rules by Beijing to curb excessive spending in online gaming, wipes nearly $80bn value off two Chinese gaming giants

Authorities in Beijing are once again targetting gamers, with draft rules to curb excessive spending in online gaming.

Reuters reported that China’s media watchdog, the National Press and Publication Administration, (NPPA) on Friday announced guidelines aimed at curbing spending and rewards that encourage video games, in a blow to the world’s largest gaming market.

This is not the first time that China has targetted the gaming community, as is another attempt by the ruling Communist Party to retain control of the virtual economy and online world.

Draft rules

When the news of the proposed new rules emerged, it caused shares in two of the biggest Chinese gaming companies, Tencent and NetEase, to plunge in Hong Kong trading.

Tencent, China’s largest gaming company, saw its shares plunge 16 percent before recovering to close 12 percent lower. Meanwhile NetEase’s stock price lost about 25 percent of its value.

The share price movement wiped nearly $80 billion in market value off the two firms.

According to Reuters on Friday the new rules from the National Press and Publication Administration, will effectively sets spending limits for online games.

Online games will now be banned from giving players rewards if they log in every day; if they spend on the game for the first time; or if they spend several times on the game consecutively. All are common incentive mechanisms in online games.

Games are also required to set limits on how much players can top up their digital wallets for in-game spending.

Tencent Games’ vice president Vigo Zhang reportedly said Tencent will strictly implement regulation requirements.

NetEase reportedly declined to comment.

Gaming crackdowns

This is not the first time that Chinese authorities have cracked down on the gaming community.

In August 2021 the NPPA imposed tough new rules governing how much time children in China could play video games.

It limited online gamers under the age of 18 from playing on weekdays, and restricted them to playing online to just three hours most weekends.

This was (at the time) a significant escalation of the restrictions on the country’s massive gaming industry, as well as the country’s youngsters.

Prior to that, children in China had in 2019 been restricted by the NPPA to 90 minutes on weekdays and three hours on weekends.

Chinese officials justified the draconian restrictions, saying it would help prevent young people becoming addicted to video games. They also previously labelled video games as “spiritual opium”.

Approvals of new video games also were suspended for about eight months, and only resumed when Chinese authorities eased a broader crackdown on the wider tech industry.

In November 2022, the Chinese government boldly stated that its measures had solved the gaming addiction problem.

In December 2022 the Chinese regulator approved the importing of 45 foreign games, and then in March 2023 the Chinese game regulator approved another 27 foreign games for domestic release – in the latest sign that the Chinese crackdown on gaming industry was easing.

Other restrictions

Clampdowns and restrictions in China are of course nothing new, and the country is famous for its online firewall and Internet restrictions.

In 2019 for example China enacted a law that requires individuals to have their faces scanned when purchasing a SIM card, to ensure mobile users could be identified.

Beijing also forced through a draconian security law in Hong Kong in 2020, which the British government said at the time violated its Joint Declaration agreement between the two countries.

That law banned any activity Beijing deemed to constitute sedition, secession and subversion, and allowed Chinese state security to operate in the territory.

In 2021 China also approved sweeping new rules to govern the collection and use of people’s personal data going forward. Essentially this law prohibited “illegally collecting, using, processing, transmitting, disclosing and trading people’s personal information.”

China has also previously clamped down on private enterprises and companies in the country, which has impacted some of the country’s high profile public figures.

Jack Ma pictured in Thailand in early 2023 visiting a local food stall. Image credit: Jack Ma/Facebook
Jack Ma pictured in Thailand in early 2023 visiting a local food stall. Image credit: Jack Ma/Facebook

China’s central bank in 2021 urged banks and payment firms to crack down harder on cryptocurrency trading.

This was part of China’s ongoing crackdown on the banking and crypto-mining industry.