The Chinese government created this situation by effectively allowing the GAPP to become a virtual protection racket for the domestic game operators. They knew what they were doing then and I can imagine the GAPP would argue they are only doing what the Government wanted in "protecting Chinese culture". Whether the Ministry of Culture have had a change of heart or are just paying lip service is hard to say. They could certainly slap down the GAPP if they wanted but despite some public bickering, things continue as they are.
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