China announces stricter online gaming regulations: Here is all you need to know

The regulations had an immediate and severe impact on Tencent, wiping around $54 billion off the company's share value. (AFP Photo)

In a bid to curb online gaming and address concerns over youth video game addiction, China announced a new set of regulations on December 21, triggering panic among investors and significant losses in the tech sector.

The drafted restrictions target in-game purchases, obsessive gaming behavior, and the promotion of specific features meant to extend gameplay time.

Key regulatory measures

Limiting in-game purchases:

The regulations aim to restrict the amount of time and money spent on gaming, focusing on limiting in-game purchases.

Ban on forbidden online game content:

Reiterating a previous ban, the regulations maintain restrictions on "forbidden online game content" that endangers national unity, security, reputation, and interests.

Controls on recharging in-game wallets:

The draft introduces limits on recharging in-game wallets to curb excessive spending.

Abolishment of features to increase gameplay time:

Features designed to extend gameplay time, such as rewards for daily log-ins, will be abolished.

Pop-up warnings for "irrational" playing behavior:

Users will now receive pop-up warnings highlighting "irrational" playing behavior.

The move comes as an extension of Beijing's actions against the gaming sector initiated in 2021 as part of a broader crackdown on Big Tech. The 2021 regulations included strict limits on the amount of time children could spend playing online games.

China's gaming Cos. report losses as crackdown sends shockwaves

China is the world's largest gaming market, with Tencent holding a dominant position in terms of revenue globally. The regulations had an immediate and severe impact on Tencent, wiping around $54 billion off the company's share value. Rival companies like NetEase and XD also experienced substantial losses, with NetEase down nearly 25.0 percent at close, and XD shedding 19.0 percent.

The shockwaves extended beyond gaming companies, affecting Hong Kong's Hang Seng Index, which plummeted more than four percent at one point before closing 1.7 percent lower. Other tech firms, including Meituan and Alibaba, also saw significant declines, with Meituan off nearly four percent and Alibaba down about two percent.