Shares of Tencent Holdings and other leading Chinese video game companies plunged into trading in Hong Kong on Tuesday after a Beijing-affiliated outlet called their products “spiritual opium.”
The explosion of the state-affiliated outlet, the Economic Information Daily, came after months of increased pressure from Beijing targeting the entire Chinese internet industry, which serves one billion users. This pressure has prompted global investors to withdraw billions of dollars from Chinese tech stocks, fearing that tougher regulation could hurt business prospects.
The Economic Information Daily article did not say specific policy changes would be made, and it was not clear whether it reflected the views of Beijing officials or just those of the publication’s editors. .
Adding further to the uncertainty, the link to the article was cut later Tuesday, although a copy can still be found on the site of Xinhua, the state’s official news agency, which controls the. Economic Information Daily.
Despite the uncertainty, nervous investors rushed to sell stocks.
Tencent, a tech conglomerate with a strong presence in social media and entertainment in addition to video games, saw its shares drop about 10% at one point, though losses eased later on Tuesday and ended in a decrease of about 7%. NetEase, another mainland video game company, saw its shares fall almost 9%.
The title of the article – â’Spiritual Opium’ Turned into a Hundreds of Billion Dollar Industryâ – left little doubt about the central thrust of the article. He cited a litany of threats posed by video games, including distracting attention from school and family and causing myopia.
“No industry or sport should develop at the cost of destroying a generation,” he said.
The article quoted Tencent, which owns popular games in China like Honor of Kings as well as popular titles around the world, like League of Legends.
Tencent released a statement on Tuesday on its WeChat social media network outlining some of the limits it recently decided to put in place, such as limiting play time for minors and increased efforts to track down those who lie about their age. to play.
The scrutiny is nothing new to Tencent or the industry. More than half of Chinese internet users play online games, according to government statistics. In the past, officials feared that the games could harm children’s academics, damage their eyesight, and reduce the country’s military readiness. In 2019, authorities limited the time young people could spend playing online games.