China has fired a top official after proposed video game restrictions unleashed a market meltdown of epic proportions

• Feng Shixin had oversight of China's video game regulator.

• He was fired last week after the botched crackdown on video games in December, per Reuters.

• The proposed restrictions on the sector sparked a massive sell-off in gaming stocks.

A top official in charge of regulating video games in China has lost his job after last month's crackdown on the sector.

Feng Shixin was the head of the publishing unit of the Chinese Communist Party's publicity department. In this position, Feng had oversight of China's video game regulator. Feng was fired last week, according to a Reuters report published Tuesday.

Sources familiar with the matter told Reuters that Feng's departure was linked to the slate of proposed video game restrictions announced on December 22.

The planned restrictions were meant to discourage people from playing video games by limiting in-game spending and restricting daily login rewards.

The move, however, rattled markets and sparked a massive sell-off in gaming stocks.

According to Bloomberg, gaming giants Tencent, NetEase, and BiliBili, a video-sharing site popular with gamers, lost over $80 billion in market value on the same day.

Shortly after, Chinese officials quickly walked back the restrictions. The regulator said in a notice on the following day that it would refine the proposed regulations after considering feedback from the industry.

Steven Leung, an executive director at brokerage firm UOB Kay Hian, told Bloomberg that Feng's removal "will reduce the chance of further panic selling" but wouldn't "attract new liquidity buying."

Leung says this is because "the change in such a short period of time means policies remain uncertain."

Representatives for China's State Council Information Office did not immediately respond to a request for comment from Business Insider sent outside regular business hours.

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