Tech giants’ shares tank after China brands online games ‘electronic drugs’ harming kids

Shares in two of China’s biggest online gaming firms plunged on Tuesday after a state media outlet called them “electronic drugs”.

The article also called for further restrictions on the industry in order to prevent addiction and other negative impacts such as short-sightedness and restricted growth in children.

For a long time, Beijing has been concerned about the impact of video games on minors. All online games now require approval from regulators.

In 2018, Beijing froze new game approvals over concerns that gaming was impacting youngsters’ eyesight.

In 2019, China brought in rules that banned those under 18 years from playing online games when they should be asleep and restricted the amount of time they could play.

Tencent and NetEase shares fell more than 10% in early Hong Kong trade before regaining some of those losses.

Investors are increasingly concerned about Beijing cracking down on firms, the BBC is reporting.

In recent months, authorities have announced a series of measures to tighten their grip on technology and private education companies.

An article published by the state-run Economic Information Daily said many teenagers had become addicted to online gaming and it was having a negative impact on them.

The article cited Tencent’s hugely popular game Honor of Kings, saying students were playing it for up to eight hours a day, and asked for more curbs on the industry.

“No industry, no sport, can be allowed to develop in a way that will destroy a generation,” it said before going on to liken online games to “spiritual opium”.

Tencent has now said it will introduce new measures to reduce children’s access to and time spent on its Honor of Kings game. The company also said it plans to eventually roll out the policy to all of its games.`

The recovery in share prices came after Economic Information Daily deleted the article from its account on the Wechat social media platform.

Tencent also saw its shares fall last week after being ordered to end exclusive music licensing deals with record labels around the world.

The move was aimed at tackling the technology giant’s dominance of online music streaming in the country. It currently controls more than 80% of China’s exclusive music streaming rights after an acquisition in 2016.

Tencent is just one of a number of Chinese companies listed in the US, Hong Kong and mainland China to see shares fall sharply this year as Beijing clamps down on the country’s technology and education industries.

Last week saw shares in Chinese online tutoring firms slump after they were stripped of the ability to make a profit from teaching core subjects. The major shift in policy came as authorities try to ease the financial pressures of raising children.

Officials have been worried after China’s latest census showed that the birth rate had fallen to the lowest in seven decades.