Experts say this ban helped pave the way for the development of the Chinese metaverse, as it separated virtual spaces from digital assets. “The main difference (in the metaverse) between China and the rest of the world is that it will be highly regulated in a centralized way,” says Zhengyuan Bo, a partner at the China-focused research firm Plenum. “There is limited room for growth without (digital assets) to generate income.”
The government has not cracked down on cryptocurrencies. Gaming — which has been a mainstay of the metaverse in the West — has also been pressured from the top. Amid concerns that young people are becoming addicted to online games, state media have dubbed the industry “spiritual opium”. Between 2018 and 2022, the government froze the issuance of new game licenses for a total of 17 months, and in 2021 it limited minors to three hours of playtime per week.
But the government is willing to subsidize parts of the metaverse that it feels could be directly beneficial to the economy. The digital twins are included in Beijing’s 14th Five-Year Plan, the formidable economic strategy document that sets the national agenda from 2021 to 2025. The action plan published late last year by five ministries, including the Ministry of Industry and Information Technology, promised to develop Virtual reality industry to 350 billion yuan ($ 51 billion).
The high-level plan outlined innovations they’d like to see more of, including near-eye display (a way to project images to a user’s eye); Rendering processing (converting 2D or 3D models into photorealistic images), sensory interaction, and network transmission.
But support from the government is conditional – Beijing has a vision of what advanced technology will do for China. That is to say, instead of a virtual world where people can socialize, work and play, the real meaning needs to serve China’s physical economy.
“At the current stage, everyone is focusing on industrial applications from education, medicine, travel and industrial development,” says Siri Chen, Marketing Director of HiAR, speaking from the company’s headquarters in Zhangjiang Hi-Tech Park in Shanghai. In a WIRED demo, a HiAR employee worked as a factory worker on a HiAR headphone and was asked to repair a valve.
Other companies linked to Metaverse have pivoted in anticipation of investment from the government. For Eric Liu, co-founder and chief technology officer of Shanghai-based digital twin Digitwin Technologies, the 14th Five-Year Plan has helped underpin his company’s shift to focus on energy and manufacturing — “an area previously not ready” for this type of technology, he says.
While the Chinese government’s willingness to shape a metaverse may limit its scope, state support could mean it doesn’t fall victim to its notorious tech sector, which picks up trends very quickly. Startups often try to be “in the middle of a whirlwind”, which means the right direction with huge growth potential.
“If anything noisy were to happen in China, you would see companies flocking into the space,” says Jingshu Chen, co-founder of VR VeeR. “However, if growth is not as fast as you would expect, more companies are also likely to pivot.”