China removes official after video games rules spark turmoil -sources

China removed an official at a government body overseeing its press and publications regulator, five sources who were briefed on the matter said, days after Chinese gaming stocks were hit by proposed rules to curb spending on video games.

Feng Shixin was removed last week from his position as head of the publishing unit of the Communist Party's Publicity Department, the sources said. The department oversees the National Press and Publication Administration (NPPA) which in turn regulates China's vast video games sector.

China's State Council Information Office, which handles media queries on behalf of the Chinese government, including on personnel matters, did not immediately respond to a request for comment and Reuters was unable to obtain Feng's contact details to reach him for comment. The five sources said Feng's removal was linked to rules the NPPA announced last month that sent stocks in the world's largest video games sector, including industry giant Tencent, plunging.

The sources declined to be identified as authorities had yet to officially announce Feng's departure.

Feng has in recent years represented the Chinese government at events to discuss authorities' efforts to regulate the industry, including game approvals and real-name verification requirements for gamers. Reuters was not able to establish how long he had served in his current role.

The NPPA's proposed measures, which seek to curb spending and the use of rewards that encourage the playing of video games, triggered fears that authorities were once again cracking down heavily on the sector and wiped nearly $80 billion off the market value of China's two biggest gaming companies.

Analysts also said the plans brought the risks of potential regulatory changes back to the fore in the minds of investors, hurting confidence at a time when Beijing has been trying to boost private sector investment to spur a slowing economy.

Five days after the rules were announced, the NPPA struck a more conciliatory tone, saying it would improve them by "earnestly studying" public views.

Beijing cracked down heavily on its video gaming sector in 2021, setting strict playtime limits for under 18s and suspending approvals of new video games for about eight months, citing gaming addiction concerns.

The crackdown was part of a wider regulatory tightening across several sectors, including technology and property, and led to 2022 being the Chinese gaming industry's most difficult year on record as total revenue shrank for the first time.

China's video game market returned to growth last year as domestic revenue rose 14% to 303 billion yuan ($42.47 billion), according to industry association CGIGC.