According to today's New York Times:
"HANGHAI — The buying and selling of the make-believe currencies used in online gaming has become so widespread that Chinese authorities fear it will affect the real economy. To quell that threat, those authorities said on Tuesday that they had issued new regulations aimed at restricting the trade and use of virtual money.
....Last year, nearly $2 billion in virtual currency was traded in China, according to the China Internet Network Information Center. Some experts say they believe there is a much larger underground economy in the virtual world.
......On Tuesday, China said that new regulations would restrict the trading and use of virtual money, and that virtual currencies would be banned from being exchanged for goods."
The official statement can be found at China's Ministry of Commerce.
The problem China is facing is that users have started to take virtual currency such as the widely popular QQ coins and exchanged them for real goods and services. This in effect bypasses the government's highly regulated currency which is subsequently seen as a threat to government control.