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According to the new rules published on Monday, which were first reported by Netease and translated by Games in Asia, foreign companies will be allowed to produce and sell video game consoles in China, but only if they work with a Chinese domestic business partner and run operations from the Shanghai Free Trade Zone.

The new rules also require foreign companies to submit video games for review and approval by the local Shanghai government's Ministry of Culture, which is expected to fast-track decisions on foreign video games within 20 days after they are submitted. If local Chinese authorities decline approval for a foreign video game, the new regulations make it easier for companies to address the rejected game's issues with the authorities, as they require the Ministry of Culture to provide written explanations why the video game was rejected.

The list of items not permitted by new regulations include:

1. Content that violates the basic principles of Chinas constitution 2. Content that harms national unity, sovereignty or territorial integrity 3. Content that endangers national security or harms national honor or interests 4. Content that incites ethnic hatred or ethnic discrimination, insults national pride, or hurts or infringes on China's national customs, habits, or national unity 5. Content that violates state religion policies or promotes cults or superstition 6. Content that propagates obscenity, gambling, violence or drug-related criminal activities, or that abets a crime 7. Content that's contrary to public morality or national cultural traditions 8. Any content that insults, libels others or infringes upon the legitimate rights and interests of others 9. Content that other laws and regulations have already prohibited

Foreign console video games will be required to use simplified Chinese characters and cannot only use traditional Chinese characters, such as those used in video games released in Hong Kong and Taiwan.

The new rules may allow companies such as Microsoft Corp. (Nasdaq:MSFT), Sony Corp. (NYSE:SNE) and Nintendo Co., Ltd. (OTCMKTS:NTDOY) to sell their respective video game consoles and games in China legally.

The new censorship regulations appear to prevent such popular foreign video games as Grand Theft Auto 5 and Battlefield 4 from entering the Chinese game market legally, depending on how strictly the rules are enforced.

The new rules governing the manufacture and sale of video games and consoles in China by foreign companies are part of a larger free trade initiative that China began in September 2013when itestablished a free trade zone in Shanghai.

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China Releases Video Game Console Censorship Guidelines For Foreign Companies Operating In Shanghai Free-Trade Zone