China Appears to Backpedal From Video Gaming Crackdown

Chinese regulators on Tuesday appeared to backpedal from a plan to reduce how much money people spend on online video games, after the proposal had tanked video gaming companies’ stocks and raised doubts about the government’s commitment to reviving China’s slowing economy.

The draft rules disappeared from the website of the National Press and Publication Administration, the agency overseeing the proposal, after previously being posted there for public comment. Instead, the page displayed an error.

The agency, which issues licenses to game publishers and regulates the industry, did not issue any notice of retraction. An employee who answered the phone said she was not clear on the circumstances surrounding the move.

Even absent confirmation that the proposal had been killed, the stock prices of China’s two largest video game companies jumped on Tuesday, with Tencent rising 3.7 percent and Netease rising 6 percent, more than the overall market.

The wide-ranging draft rules, as first announced late last month, would have imposed spending limits on the video gaming platforms and prohibited minors from tipping video game live streamers, a popular way for fans to support their favorite online influencers. They also would have banned companies from offering rewards for frequent logins, and implemented a broad prohibition on any content that could endanger national security.

The authorities said that the goal was to protect minors and improve regulation of the gaming industry.

The plan came as a surprise to the industry, and investors dumped tens of billions of dollars in stock in Chinese gaming companies.

The sell-off came just as the government is trying to woo back domestic and foreign investors amid a sluggish economy and widespread concerns that Beijing is more preoccupied with tightening control over the economy and daily life than in promoting growth.

Many investors are still spooked by an abrupt 2021 crackdown on the Chinese tech industry, which helped wipe out trillions of dollars in value from some of China’s best-known private companies, as well as by the country’s three years of rigid coronavirus restrictions.

Gaming, in particular, has been a target before, too, with previous rules that sought to bar children and teenagers from online gaming on school days and to cap their screen time on other days.

Within days of the stock market’s plunge last month, government officials already appeared to be reconsidering. The press and publishing administration issued a statement saying that it wanted to promote the “healthy development” of the gaming industry, and was “listening to more opinions comprehensively.”

The period for public comment on the proposed rules ended on Monday. But many other draft regulations remain online even past their public comment periods.

Beijing’s relationship to its gaming industry has been fraught for years. The ruling Chinese Communist Party has repeatedly expressed concerns about online gaming addiction, with state media likening one popular game to “poison” that could corrupt teenagers and distract soldiers from their duties. Many parents have also expressed support for tighter curbs.

But Chinese tech companies like Tencent are also cornerstones of the global gaming industry, with the number of Chinese gamers — and the money they spend — leading the world, according to Goldman Sachs. The country has embraced competitive gaming, building e-sports stadiums and offering college majors on the topic.

When the eastern city of Hangzhou hosted the Asia Games last year, e-sports was a medal event for the first time. China won the highest number of gold medals.

Joy Dong contributed research from Hong Kong