Will Chinese Teenagers REALLY Game Three Hours a Week?
Silly season starts for Beijing regulators
As a father who survived the teenage years of two sons, I have a concise reaction to China’s order to cut minors’ video game time to three hours a week: Seriously?
Sector researcher Niko Partners estimates 110 million gamers under 18 in China. Which means about 109,999,000 new schemes hatching, as we speak, to evade the Party’s strictures.
Chinese teens are old hands at dodging state paternalism. Beijing banned game consoles outright in 2000. The result: a massive shift to online gaming. Authorities gave up and re-legalized consoles in 2015. In 2019, they tried cutting minors’ online game time to 90 minutes a day. That sparked a proliferation of virtual private networks, not to mention low-tech alternatives like an obliging older sibling’s account, or fake IDs to sneak into an internet cafe. You can read blow-by-blow in this fine piece by Fortune’s Grady McGregor.
The latest workaround, reportedly, is streaming videos of other people playing. No one has gotten around to limiting streaming yet.
Investors were quick to call the government’s bluff (journalists less so). Shares in Tencent (700. Hong Kong), which depends heavily on gaming revenue, and gaming pure-play Netease (NTES), have actually risen since the three-hour edict came down August 30. Nonetheless, this is no laughing matter. The gaming rules are just part of a fresh Chinese regulatory onslaught that seems to be slipping the rails from the sensible to the ridiculous.
The campaign against Chinese internet companies started last November, when securities regulators canceled the mega-IPO for Ant Group, the fintech spin-off of e-commerce giant Alibaba (BABA). They had a good case: Ant was originating masses of unsecured credit without taking any capital risk, threatening a micro-credit version of the 2008 U.S. mortgage meltdown. Follow-up moves were also rooted in reason: Alibaba itself got smacked down for keeping merchants from selling with competitors. Online tutoring companies like New Oriental Education (EDU) were clipped for draining families’ resources with essentially useless cram courses. And so on.
The latest regulatory wave is different. Aside from the assault on the teenage gaming, spoil-sort bureaucrats have unleashed a blizzard of directives at the entertainment industry. These range from the ludicrous — no more celebrity popularity lists or other celeb-related posts that could “cause trouble”— to the sinister: a ban on “sissy men and other abnormal aesthetics.”
Superstar actress Zhao Wei was abruptly disappeared from streaming and social media — a quarter century of acclaimed work down the Orwellian memory hole. Maybe someone didn’t like her old friendship with Alibaba founder Jack Ma. Maybe it was something else. No explanation was deemed necessary. Next up: a crackdown on “chaotic” financial information. The Party only wants “healthy” business news. Oh boy.
China enthusiasts like to depict Xi Jinping and his neo-mandarin band as a selfless and disciplined bunch, working from a unified playbook for the betterment of China as they see it. You can question their conclusions, but not their motives. The recent antics suggest instead an anarchic pile-on, where obscure functionaries from the Cyberspace Administration of China or National Press and Publication Administration are using the rising anti-corporate climate to show they are players, too.
That’s a benign interpretation. A more jaundiced view might note that this surreal bureaucratic offensive is shaking loose very real money from the biggest names in China Inc. Alibaba and Tencent alone have pledged $30 billion to promote “common prosperity,” Xi’s buzzword du jour. Founders at the likes of Meituan (3690.Hong Kong), Pinduoduo (PDD) and Xiaomi (1810. Hong Kong) are adding billions more.
It would be sweet to think that this fortune will be ring-fenced in Gates Foundation-esque charities, or finance transparently monitored anti-poverty programs. If you believe that, well, lol. The reality will likely hew closer to the Zhao Wei vanish-without-a-trace model.
Maybe that means we’re getting toward the end of the real deal between the internet billionaires and the Party, and investors can start to relax. More likely the Party will keep pressing its advantage, and those common prosperity contributions keep rising for a while. Follow the money, if you can.