The Chinese government has reportedly moved to ban gold farming by outlawing the trading of virtual currency for real goods or services.

It estimates that trade in virtual currency exceeded several billion yuan last year, a figure believed to be growing by 20 per cent annually. One billion yuan currently equates to about $146 million, reports Information Week.

Gold farming sees MMO players attempt to acquire items of value which are sold to create stocks of in-game currency, usually by exploiting repetitive elements of the game's mechanics, for the purpose of selling it on to other players for real life cash.

According to research by the University of Manchester, between 80 and 85 per cent of gold farmers are based in China, generating between $200 million and $1 billion annually.

China's Ministry of Culture said in its new rules: "The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services."

However, China Daily says the Chinese government may not apply its new virtual currency regulation to in-game items.