China cracks down on `virtual money'

http://www.tencent.com.hk/index_e.shtml

BEIJING (AP) -- Regulators have ordered Chinese Web sites to limit the use of "virtual money" after concerns that the online credits might be used for money laundering or illicit trade.

The order governing credits sold by Web sites to customers to pay for online games and other services comes amid a campaign to tighten official control over China's online industry.

The most popular Chinese online credits are "QQ coins" issued by the Web site Tencent.com, which has 220 million registered users. A man who answered the phone Wednesday in Tencent's publicity office refused to say how many of the credits it has sold.

Financial experts cited by Chinese media said the growing popularity of "QQ coins" could complicate the government's ability to control the flow of real currency, and the central bank has issued a warning about the use of virtual money.

News reports in January said customers are using online credits to gamble, pay for phone-sex services and to shop online. Authorities said they were looking into whether the credits were being used as a way to launder money.

Regulators told Web sites to bar the use of credits for buying goods or other unauthorized purposes, according to the order, issued jointly by several ministries. It was sent to Internet companies last month and publicized by state media this week.

China's central bank "is strengthening the standards and management of virtual currency used in online games," said the order. It said the bank was "strictly limiting" the use of virtual currency and told Web sites to make a clear distinction between online credits and money used for e-commerce for real goods.

Users are barred from trading virtual currency for real money, the order said.

The latest order gave no details on whether authorities had confirmed the credits were being misused.

China has the world's second-largest population of Internet users after the United States, with 137 million people online, according to the government.

The communist government promotes Internet use for education and business but tries to block its public from seeing material deemed obscene or subversive.

President Hu Jintao ordered regulators in January to promote a "healthy online culture" to protect the government's stability, according to state media.

The government has barred local authorities from approving new Internet cafes this year.