China attempting to keep virtual and real economy separate

… by restricting purchases of real goods or money with virtual currencies.

Pre-paid cards are also considered virtual currency, but virtual items are not.

The new law states:
“The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services.”

Justifications offered:

- prevents illegalities

- prevents gambling

- prevents money laundering
- preemptive step towards preventing “virtual economy” having a negative influence on Chinese financial system

Affects:

- farmers selling virtual currency
- the definition of currency only covers medium currencies between real-money and items. This situation becomes a bit hazy though, because in some VW’s there is only one currency (earned through gameplay AND at the same time purchased with real money). In a way farmers selling virtual currency would still fall into the banned category, but the legistelation doesn’t seem to be targeted to “harmless” currencies such as WoW-gold, but towards currencies such as QQ-coins, which are widely used outside the Tencent QQ service.

- users doing business in VW’s (such as Second Life)

- Prevents gambling? Because you can not convert v-currency back to real money?
- Secondary market of pre-paid game cards
—> everything that includes exchanging virtual currency (as defined by the law) into real money or products.

Doesn’t affect:

- farmers selling virtual goods directly

- operator selling v-currency and v-goods

 

References:

http://english.mofcom.gov.cn/aarticle/newsrelease/commonnews/200906/20090606364208.html

http://www.virtualgoodsnews.com/2009/06/china-makes-first-move-to-regulate-virtual-currency.html

http://www.chinadaily.com.cn/bizchina/2009-06/27/content_8330180.htm

http://www.informationweek.com/news/internet/ebusiness/showArticle.jhtml?articleID=218101859

About these ads

5 thoughts on “China attempting to keep virtual and real economy separate

  1. I’m not even clear this covers using real money to buy virtual currencies. And its not about the major trade in gold farming such as WoW. And its not about buying/selling in-game items. And its not about power-levelling. Bottom line: its not really about gold farming.

    Two other things to say. The Chinese government appears to be this very odd mixture of fantastically effective (think Olympic Games) and fantastically ineffective (think rules on piracy and intellectual property). I suspect this ruling may fall into the latter category.

    Second, this mirrors quite closely something that happened in Korea around 2006 based around a game called “Sea Story”. A huge amount of gambling and then illicit political payoffs arose around use of the Sea Story currency. I’m not aware of any reports about damage to gold farming that resulted and – as might be the case in China – the legislation in Korea may have been as much about political posturing and being seen to be doing something (i.e spin) rather than an implemented reality.

    Richard Heeks
    Centre for Development Informatics
    University of Manchester, UK

    http://www.manchester.ac.uk/cdi

  2. I’m not even clear this covers using real money to buy virtual currencies. And its not about the major trade in gold farming such as WoW. And its not about buying/selling in-game items. And its not about power-levelling. Bottom line: its not really about gold farming.

    I agree. News and many blogs have pretty much wrote their articles based on the (now fixed) title of the Informationweek newssite.

    Yes, there seems to be a lot of fuzz about banning gold farming or taxing virtual property etc ( http://virtual-economy.org/blog/follow-up_20_tax_rate_on_virtu ) Richard, Do you know what happened with the taxation? Because, the taxation thing also seemed to fall into the category you mentioned :)

    What I gather, Tencent QQ coins are used a lot for buying for example cybersex services, gambling etc. Pre-paid cards are probably evil because its another medium-currency for buying playtime for otherwise “evil” games. I guess all of this is quite well in line with other measures implemented to restrict gaming and internet use in general in China.

    QQ Currency is so well adopted that various other online companies enabled people to pay with it. In a way its like PayPal. I think China is trying to break the link between the virtual and real economy because of cases like these.

  3. In China, a huge number of people chose gold farming in online games as their real primary job. A number of Korean or Chinese mafia groups founded gold-farming companies in China employin the people. They have their employees play online games more than 12 hours a day to gain the virtual money and sell it to Korean gamers. Actually, this kind of virtual money-real money trading is not intended by the developers of the games. It’s becoming a serious social problem in China.
    So, the Chinese government is trying to ban this activity.
    Also, the gold farmers spoil the gameplay of the other players because they don’t care about the other game elements like community, communication between users like a bot. In fact, lots of users leave the games because of the gold farmers.
    I think this won’t affect the developer-designed virtual currency models.
    -Taiyoung (I forgot to log-in)

  4. This is an exciting allegation – that mafiosi, triads, etc – are involved in gold farming. But does anyone have any actual evidence to support this?

    Same with the accusation about gold farmers ruining games. I know a small sample size is statistically crap, but I’ve been playing WoW for two years. Neither I nor anyone I know has had WoW “spoiled” by gold farmers. Apart from a few bits of spam in the cities and the odd whisper, there’s been nothing. Yet WoW must be one of the most-farmed games.

    The more allegations and accusations one hears about gold farmers, the more it seems they have become empty vessels into which we pour all the ills of the age. No doubt the reason we can’t find Osama-bin-Laden is that he’s holed up somewhere levelling his Warlock; ninja-looting from US players; and generally screwing with Azeroth’s economy.

  5. Ni Hao,

    I would not go as far as to state that gold farmers would ruin game experiences either, but it is still difficult to know exactly what is going on in the eastern market. Taiyoung, could you provide us more information on this?

    Richard, as you mentioned, I guess the biggest nuisance related to gold farmers is the advertising spam. Another most commonly referenced problem is the effect to the internal economy of the game. Although, this is quite invisible for most players. I am not convinced, that a player’s experience is easily ruined through fluctuations in prices in auction house(wow), for example. The primary effects of gold farming to internal economy manifest in rules set up by the developers. Gold farming affects how the game is designed, and one might wonder how would it be if gold farming wouldn’t have to be dealt with on the design level. Virtual economies are partly designed to inhibit and reduce gold farming.

    few examples from wow:

    - BoP&BoE items
    - Bop currencies (badges, etc)

    - Blizzard had greatly reduced the difficulty of accumulating wealth

    - Lessened the importance of non-bop items and at the same time increased the importance of BoPs (badges etc)

    Personally, for me gold farmers haven’t been a nuisance, but on the contrary, it has been great fun killing gold farmers on duty, when they have been farming the same spot where I was farming. On other instances, I have made some lucrative deals with them. Buying with in-game gold(very cheap) the stuff they were farming ( for example massive bundles of elemental earths, when we needed nature resistance potions in Ahn’Qiraj).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s