China Bans Goldfarming (Not)


Update: see this blog entry.

Informationweek has reported that the Chinese government’s latest internet reforms include a ban on trading virtual currency for real currency. Richard Heeks at the University of Manchester, who is quoted in the report, estimates that around 80% of the world’s gold farming takes place in China. Furthermore:

“The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146 million.”

I wonder what that will mean for China. I guess it’s a drop in the ocean for their entire economy, but it’s going to put people out of work. Will it continue illegally? Where will I get my 1000 gold for magic hammers from? Aiie!

34 Comments

  1. blerg says:

    They can just outsource it to the subcontinent like everyone else.

  2. R.I.P DNF says:

    Well this is China we are talking about, of course it will continue illegally, they are a dedicated bunch of gamers, and would put me to shame, I think I read that a couple of them gamed, until they got blood clots in their legs and died…. Wish I had a game at the moment that would make me sit still for that long…

  3. Lack_26 says:

    Ah, finally. Now I can re-instate my child sweat-shops in Europe without being under cut by those (surprisingly lovable) Chinese.

  4. duel says:

    umm @R.I.P DNF i think they play the game in huge stretches of time just to make enough money to live don’t they?

    I don’t even know if liking the game comes into it?

  5. Nick says:

    Good.

    Although now the Nigerians will take over or something.

  6. Ayekay says:

    Whoa whoa – the definition of virtual currency explicitly excludes ‘tools and weapons’. So you can still farm and sell those purples. That won’t slow farmers down much. I think the ‘prepaid game card’ is the clue – this is mostly about QQ Coins and their ilk.

    Still this seems a turnaround from the decision to tax virtual currency last year which got the Terra Nova crowd so excited:

    link to blogs.wsj.com

  7. Mil says:

    From TFA:
    The extent to which the Chinese government will apply its virtual currency rule to online role playing games remains unclear. A report in the English-language China Daily says that in-game gear is not considered virtual currency, so selling virtual items may be allowed to continue.
    That’s your loophole right there.

  8. Richard Clayton says:

    I hope you asked Ross Atherton’s permission before sneaking in and taking a photo of his “lunch money”.

  9. Ian says:

    Wow.com’s article mentions in more detail something you touched on there Jim, about people being out of work.

    link to wow.com

  10. WantOn says:

    Its a nice gesture from the Chinese government. Let’s just hope it has a noticeable effect in-game eh?

  11. Ayekay says:

    I don’t think it’s even a loophole so much as a law directed at something else. You can use QQ coins to buy CDs and makeup. It acts as a parasitic parallel currency that speculators can trade in an uncontrolled way. It’s not impossible (though I’m told not likely) that QQ trading could have an effect on inflation – something China’s more worried about than usual right now. I suppose this might be a reason for the turnaround from last year’s tax policy. But pretty much everything I know about the Chinese virtual economy is in this comment box, so I wouldn’t take my word for it.

  12. Yang says:

    Well, I don’t know how gold buying/selling work in US or EU, but no one here in China actually register for a legal operation of gold-farming anyway.
    Of course if the Chinese government really WANT to, it CAN and WILL crackdown on ANYTHING, but I doubt they would put significant resources to enforce this particular ban.

  13. Yang says:

    @Ayekay: QQ coins is more comparable to Microsoft LIVE points. It’s the standard currency for all QQ related services and can only be bought from Tencent(from what I know Tencent rarely, if ever give it out for free). And for years the QQ coin maintains a quite solid 1 to RMB 0.9-1 “exchange rate”.

  14. Ayekay says:

    Yang: I’m basing this on skimming pieces from the WSJ, not any experience of living in China :) But my understanding is that QQ coins are informally used as a medium of exchange in the black market. cf this (warning, two year old) piece: link to online.wsj.com

  15. mandrill says:

    This might sound a bit tinfoil hat, but I had heard rumour that gold farming in China was used to fund and launder money for under the table intelligence operations. If this is the case I really don’t think its going to to have a noticable effect on the gold selling spam in games like WoW or EVE.

  16. Clockwork Harlequin says:

    How can they have people everywhere and we don’t know a thing about them? We must have an agent infiltrate this ‘World of Warcraft’ before they get the Bomb!

  17. Bongo says:

    Somebody mentioned they can still sell items. Couldn’t they just buy something to act as a currency instead, it’s more cumbersome but still, the receiver could then go into a in-game shop and sell it and have his munnies back.

  18. Simon Jones says:

    What’s so terrible about gold farming that makes it something the government needs to actually legislate about?

    Are they going to ban griefing and team killing next?

    I’m by no means an economist, so could somebody explain the seriousness of it, beyond the simple reason of “it spoils the game”? In other words: why does the Chinese government care?

  19. K says:

    @Simon
    I guess because it’s an untaxable form of income.
    That’s also why you should only click ads if the website owner has declared it to the taxman. :P

  20. unclelou says:

    “I guess because it’s an untaxable form of income.”

    I don’t think it would be untaxable – that they might actually not pay taxes is a different storym and certainly not s specific problem of gold farming.

    And at least they earn money they spend in China.

    Really totally bizarre. Unless Blizzard has a lot more political weight than anyone of us could imagine. :)

  21. Eisenhorne says:

    This is only the official statement. The real truth is they will continue to let it happen as long as they get their cut. What they don’t want is their young motivated smart people becoming westernized and realizing the Chinese government is holding them back which will lead to the last bastion of communism failing, its all a front!!! Conspiracy

  22. Tei says:

    I hate gold spammers as the next guy. But I will be sad to me the day that one china guy is put in jail for this thing. And I think china will put some people in jail, if only to make a point.

    Also. Free to play mmorpg games follow the same model as gold farmers, but is the game company that create the gold from thin air. I don’t see goldfarming as a particulary evil thing. Spamming is a evil thing, but I will not hate one thing (farming gold) for the other (selling that gold in a intrusive way).

    In a no so serius note. If all gold spammers are about to /quit, Can I have his gear?.

  23. Radishlaw says:

    This is akin to people making a new type of coin in your home country.
    I think this ban is related to virtual currency being able to be exchanged for real world money, and thus are able to avoid taxation, and can the source of a lot of economical problems. In typical Chinese government fashion, instead of painstaking defining what is okay and what is not, they would ban everything related instead, and that is what in my opinion happened here.
    Don’t expect gold farming to be extinct though.

  24. Ayekay says:

    “What’s so terrible about gold farming…why does the Chinese government care?”

    The ban isn’t about gold farming. It’s about QQ coins and possibly similar virtual currencies that are used as black market media of exchange. QQ has 220 million active users, most of them in China. WoW has just under 12 million, most of them outside China. I would be surprised if this had more than a peripheral effect on gold farming ops, especially because they specifically still allow you to sell in-game items.

  25. Ayekay says:

    @UncleLou

    “I don’t think it would be untaxable”

    They did try to put a personal income tax on virtual currency trading last year (I linked to it back up at the top of the comments). I’m guessing it’s too hard to track, especially when people are using the coins for gambling purposes.

  26. Frye says:

    Having a lot of gold became meaningless over time. You just couldnt buy anything useful with it. Except maybe some mount or crappy gear. I, for one stopped a while back when it truly sank in they have given up on balancing classes and decided people should just go and play alts, plus healing (as a priest) was so much dumbed down, i could no longer stay focused for more than 20 minutes.

  27. Taillefer says:

    These are some big numbers. I was just verifying the 220 million users thing Ayekay mentioned. The website states 800 million registered users and 300 million active. Somewhat embarrassing then, that this is the first time I’d heard of QQ.

    No wonder they tried to get some money out of it.

  28. Chemix says:

    I can imagine it now, WoW sweatshops, and I’m terrified, really

  29. Agrajag says:

    @mandrill: Forget the spooks tinfoil. What gold farming usually funds, or funded by, is identity theft. I’ve seen several articles about the link between the two.

  30. Chemix says:

    well yes, giving your credit card number and information to use it for the transaction (and by that, further transactions) to a person of anonymous background is likely not a good idea.

  31. Mad Doc MacRae says:

    I guess the Chinese government didn’t read that article posting in one of the Sunday Papers hear about how goldfarming is the natural reaction to boring gameplay, and is thus a good thing.

  32. Yang says:

    @Ayekay: If there is a inflation/surplus of QQcoins, Tencent is likely the first to react, It means real money for them. I’m skeptical about the jump 70% bit – there’s always unlimited official source at an even price, and if black market QQcoins are that cheap to begin with, I would like some! If that’s true it’s indeed a quite well hidden market ;)

    Though, QQ is huge in China, Tencent claims more than 300 million “active” instant message accounts. QQcoins could function as a token: always ample demand; solid value – backed by the single largest social networking corporation of China; easily transferable, relatively hard to track. Importantly: It never expires, so if you ban its exchange to RMB, traders can always store it, use it as real money, or just sell it – nobody can eliminate black market, nobody.

    In fact WoW pre-paid card (WoWchina is a time-based service) is traded for in-game gold and DKP, or even for “outside” things. Now to think of it, packets of cigarettes had played a similar role on earlier stage of Chinese underground trading;)

  33. James F says:

    Hate to be a downer, but you might want to take another look at your source. They’ve updated the article to say that the ban is only on using virtual currency to buy physical goods and services. Apparently using physical currency to buy virtual goods is fine by them.

  34. kaputik says:

    Nice, golden bricks :)