Gold farming, real money trades banned in China

The Chinese government has banned all forms of exchange between game economies and cash economies, including the extremely popular Chinese online games that involve buying and selling virtual goods with cash, as well as the infamous practice of gold farming (creating in-game wealth that is sold on to rich foreign players), a practice that is said to employ 400,000 people in China.

I’ve spoken to gold farm researchers in China, the UK and the US, and many believe that the gold farming industry is controlled by Chinese cartels that use language barriers to exclude others from the internal exchanges where gold from one server of a given game is exchanged for gold on another server. Of course, many people who speak Chinese live outside of the Great Firewall, but still, this might the chance that Indonesia and Vietnam (already outsource destinations for Chinese gold farming operations) as well as Eastern Europe to launch their own competing gold farming sector.

The ruling is likely to affect many of the more than 300 million Internet users in China, as well as those in other countries involved in virtual currency trading. In the context of online role playing games like World of Warcraft, virtual currency trading is often called gold farming.

The most popular form of virtual currency in China is called “QQ coins,” a form of virtual credit issued by Tencent.com.

Tencent.com, which has about 220 million registered users — about as many as Facebook — is quoted in the Chinese government news release as “resolutely” supporting the new rule. The government justifies its ban on virtual currency trading as a way to curtail gambling and other illegal online activities.

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.

The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester.

China Bans Gold Farming