Tue Sep 3

Why video games are a battleground in the US–China tech war

Written by Haiqing Yu, Professor, School of Media and Communication, RMIT University

Blockbuster Chinese video game Black Myth: Wukong sold more than 10 million copies ^[1] within days of its release last month, and its success has been hailed as a soft-power win ^[2] for the Asian superpower.

However, as a Chinese idiom states, “the intention of the drunkard lies not on the wine, but on other purposes”.

China’s push into the gaming industry also serves a “harder” kind of power: the drive to bolster domestic chip manufacturing in the wake of US semiconductor export restrictions aimed at hobbling Chinese AI research.

Blockbuster gaming with Chinese characteristics

Set in the world of Ming dynasty novel Journey to the West, Black Myth: Wukong lets players control Wukong, the Monkey King, on a journey of battles and mysteries inspired by ancient Chinese mythology.

The expansive, high-budget game is the first Chinese production on this scale to achieve such global success. Developed and published by Game Science, a studio backed by tech giant Tencent, Black Myth: Wukong shows how popular culture can follow the propaganda injunction to “tell China’s story well ^[3]”.

As I have commented elsewhere ^[4], despite criticisms in Western media ^[5] the game is a successful cultural export and vehicle of Chinese cultural soft power ^[6].

It is a source of national pride for Chinese gamers tired of playing games with foreign settings, as illustrated by a popular post circulating ^[7] on Chinese social media platforms:

你曾在大马士革骑过马在美国西部小镇开枪决斗也在埃及当过刺客现在你终于可以回到家乡做自己的英雄

Or in English (my translation):

You once rode a horse in Damascus,Duelled with guns in a small town in the American West,Also served as an assassin in Egypt.NowYou can finally return homeAnd be your own hero

The Chinese game industry levels up

Chinese government support for gaming is not new. For instance, in 2019 ^[8], the Beijing municipal government issued guidelines aimed at establishing the city as the “international capital of online games” and leveraging games as a medium to convey compelling Chinese narratives.

The “go global” strategy for gaming has been further strengthened by broader policies implemented in 2021 ^[9], 2022 ^[10] and 2023 ^[11], which aim to cultivate the development and international expansion of high-quality games that resonate with Chinese culture and values.

While the industry has had earlier successes with mobile gaming, Black Myth: Wukong is designed for the more expensive and prestigious console and PC gaming markets (which also require more advanced software and hardware). The success of the game has seen more money flowing into China’s game industry to develop major projects ^[12].

China is the world’s largest single market for games, but domestic restrictions ^[13] such as censorship, limits on children’s gaming time, and controls on in-game spending and gambling have curbed revenue for Chinese game developers. In response, they are looking to global markets.

Blockbuster game development can be a winner-takes-all business, and the high development costs mean resources typically concentrate among top companies. So it may be a long journey for China to emerge as a true leader in the global gaming market.

A critical barrier lies in hardware, particularly the supply of advanced chips – and the technological capabilities required to develop and produce them. This is the vital linchpin for digital China’s global supremacy.

Heavy-duty gaming hardware

Chinese policymakers, tech companies, members of the gaming industry and gamers are acutely aware of the hardware bottlenecks resulting from the US–China tech war. Over the past two years, the US has imposed restrictions ^[14] on the export of advanced chips to China.

While the restrictions are aimed at chips that can be used for AI, the same hardware is also needed for high-end games like Black Myth: Wukong.

The game is promoted by American chip company NVIDIA, which leads the market in the graphics processing units (GPUs) needed for cutting-edge graphics and machine learning. NVIDIA boasts it helped elevate Black Myth: Wukong’s graphics and technology ^[15] to the highest levels.

To experience the game’s visuals in their full glory, a player will need an NVIDIA GPU such as the RTX 4090, which costs upwards of A$3,000. Players must also prepare their PCs with various AI-powered “upscaling” technologies, such as NVIDIA’s DLSS or alternatives made by competitor chipmakers AMD and Intel.

Currently, the best GPUs and upscaling technologies are all manufactured by American companies, leaving Chinese game developers and players without domestic options.

China has made significant investments ^[16] in its domestic chipmaking capabilities. However, it is not yet competitive when it comes to the advanced chips needed for cutting-edge gaming, which are also useful for AI and military applications.

China has also targeted chipmakers ^[17] in the Netherlands and South Korea, in line with its comprehensive national security ^[18] strategy.

Serious games

The realms of semiconductor microchips, computer gaming and national security are deeply intertwined. Nurturing the gaming industry will stimulate demand for advanced chips – which will create a market for increased manufacturing capabilities. Industry-driven, bottom-up initiatives will proceed alongside state-led, top-down investments.

It is no wonder Chinese state media and affiliated social media influencers have all been promoting the game ^[19]. It is more than boosting the gaming industry or telling Chinese stories well (and thus encouraging Western players to learn more about Chinese culture and Chinese players to take pride in their own culture).

The game is part of China’s strategic move to win the chip war by following’s Mao’s teaching of “encircling the cities from the countryside”. The short-term focus on the “countryside” of video games is for the long-term goal of taking over the “cities” of advanced chip manufacturing.