Go Go Communist China.

This week China has decided that it will ban outside investment in its social games industry. The claim is that it will allow them to censor content and “protect” the Chinese public. This decision means that outside investors are even forbidden from indirectly influencing Chinese social game companies even through offering minor services such as tech support . This    change has already caused Chinese authorities to act quickly, by Thursday, more than 200 online games had been investigated and 45 overseas online games being run without prior approval had been shutdown. This move is a continuation of increasing attempts to gain control of the rapid expansion of social media in a country which has always attempted to hold tight the reins of the internet. The riots in the Xinjiang province this summer led to to both Facebook and Twitter being removed from the Chinese governments list of approved sites joining You Tube and Google Apps.

It is easy to see that the Chinese government wants to maintain a certain level of social control by limiting the social web, however it might not be the primary motive because it is also a huge and rapidly growing source of revenue. Inside social gaming suggested “ that at USD 3.5b in 2009 the online game business is by far the biggest Internet market in china, and is several times bigger than China’s film market”.

Earlier this year saw Chinese social networking site Tencent managed to break the $1bn revenue mark easily surpassing the profits of Facebook and Myspace.

Aside from the fact that Social network profitability is growing faster in China than the U.S. There is also faster growth of unique internet users. There were about 338 million Internet users as of June 30, topping the world, according to a latest report by the China Internet Network Information Center.

When compared to the same report from January 2007, Internet users in China had reached 137 million, accounting for 10.5% of China’s population. There was then a 147.7% increase in Internet users in the space of two years. Unlike the 2009 report the 2007 statistics on internet gaming, suggesting that 31 million Chinese Internet users engaged in some form of online game play.

If the number of game players increased proportionately with the statistic for overall internet users then internet game users would now sit somewhere around 72 million.

So it seems evident that this move by the Chinese government not only serves as a way to further regulate social interaction, but also provides trade protectionism for a flourishing industry.