Tencent Holdings and other well-known Chinese video game companies collapsed in Hong Kong trade on Tuesday after a Beijing-affiliated media company labeled their products “spiritual opium”.
The state-owned media company Economic Information Daily exploded after months of increased pressure from Beijing on the broader Chinese internet industry, which serves one billion users. These pressures have led global investors to pull billions of dollars out of Chinese technology stocks, fearing that tighter regulation could hurt business prospects.
The Economic Information Daily article did not state that certain policy changes would be made, and it was unclear whether it reflected the views of Beijing officials or just those of the publication’s editors.
The uncertainty was compounded by the fact that the link to the article was dead later Tuesday, although a copy could still be found on the website of Xinhua, the official state news agency that controls the business information daily.
Despite the uncertainty, nervous investors sold stocks quickly.
Tencent, a technology conglomerate with a large presence in social media and entertainment, as well as video games, saw its shares decline about 10 percent, although losses moderated later Tuesday and fell about 7 percent. Another mainland video game company, NetEase, saw its shares decline nearly 9 percent.
The title of the article – “A ‘Spiritual Opium’ Has Become an Industry Valued by Hundreds of Billions of Dollars” – left little doubt as to the thrust of the article. It cited a litany of video game threats, including distracting attention from school and family and causing myopia.
“No industry or sport should develop at the cost of destroying a generation,” it said.
The article highlighted Tencent, which owns games popular in China like Honor of Kings as well as globally popular titles like League of Legends.
Tencent posted a statement on its WeChat social media network on Tuesday describing some of the restrictions it recently put in place, such as:
The exam isn’t new to Tencent or the industry. According to government statistics, more than half of Chinese internet users play online games. In the past, officials have feared that games could harm children’s academics, damage their eyesight, and affect the country’s military readiness. In 2019, authorities limited the time young people could spend playing online.