Online Gold Farming: The Next Front In Trade Wars?

This Bystander hadn’t much thought of the commerce in virtual goods having the potential to become an international trade issue, but a report in the Guardian about prisoners being made to spend endless hours playing online games so that their guards could covert the credits earned into cash made us think again.

The practice is known as gold farming, from the gold in the World of Warcraft game where much of this sprung from. The article suggests that by setting 300 prisoners to the task for 12 hours, the prison guards could earn 5,000-6,000 yuan ($770-925) a day. Nor is it just prison guards that are forcing inmates to play online games for 12 hours a day for their benefit, businesses are at it, too, according to a new World Bank study. There are now an estimated 100,000 gold farmers in China, accounting for four out of five gold farmers worldwide.

In 2009, Beijing issued rules on game credits trading, with an estimated 13 billion yuan-worth having been traded the previous year. Though businesses now need a license to do so, that seems to be being ignored, clearly including in prisons in the north-east. The business of hard cash for virtual goods is a $3 billion dollar one, according to the World Bank estimates, with two-thirds of it accounted for by Chinese gold farming.

Millions of gamers around the world will pay real money for online credits and virtual goods like avatars, objects and powers, to help them progress up the levels of multiplayer role-playing games and in virtual worlds like Second Life. Cash payments for virtual items are becoming key to attracting players to the fast growing world of free-to-play online gaming. As gamers have been turned into consumers, so suppliers have sprung up to meet demand, further blurring the distinction between games and the physical world.

This new economy has mimicked the real world in creating black markets and crime. Last month, Sichuan officials started prosecuting a gamer who allegedly stole 3,000 yuan of online credits. It has also created inflation as gold farming is, in effect, a rapid increase in the money supply. (Real world) governments are starting to look at whether there are revenues to tax.

Trade disputes can’t be far behind, especially if China is running a trade surplus on the scale the numbers above imply. In the borderless world of the internet, the trade issues are a potential activists’ delight, especially if China is now not just the workshop of the world, but its virtual workshop, too–and not only creating virtual exports in low-wage, low-margin commercial gaming studios but also producing them by the sweat of prison labour.

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