China will suspend approvals for new online games, says report

Tencent and Netease led a selloff of Chinese stocks in Hong Kong after the Xinhua news service reported that officials had invited gaming firms to meeting to discuss further oversight of industry

Chinese regulators will temporarily freeze approvals for all new online games, delivering a major hit to Tencent Holdings Ltd. and Netease Inc., the South China Morning Post reported.

Officials from the Communist Party’s publicity department and the industry regulator disclosed their decision to Tencent and Netease executives summoned to a Wednesday meeting, the newspaper reported, citing a person briefed on the matter. Gaming approvals have been put on hold while the government figures out how to whittle down the number of titles in the market, the Post cited a second person briefed on the discussion as saying.

Tencent and Netease led a selloff of Chinese stocks in Hong Kong after the Xinhua news service reported that officials had invited gaming firms to the meeting to discuss further oversight of the industry and the need to deemphasize profits. Xi Jinping’s administration is waging a campaign to curb addiction among minors, reduce growing spending on virtual items and prod youths toward more productive past-times. But the official news agency made no mention of suspending gaming approvals.

China in 2018 froze approvals on game monetization licenses for months, in part to combat addiction and myopia among children. That spurred Tencent’s first profit drop in at least a decade and helped wipe about $200 billion off its market value at one point. Tencent and Netease representatives didn’t immediately respond to requests for comment.