Home-video consoles, that were growing in popularity through the 1990s, were officially banned in 2000 for fear that they were corrupting Chinese youth.
It was a kind of King Canute communism - an attempt to hold back the rising tide of capitalism and the inflow of Western cultural products.
Of course, in the end it failed and the shrill warnings about "electronic heroin" were drowned out by consumer demand.
Consoles remained available on the grey market and the gaming industry simply moved online.
Today it's an industry that's worth more than 50bn Chinese RMB ($7.9bn; Â£5.2bn) a year and the Communist Party and its army are now well and truly in on the act.
Since its public release a few months ago, Glorious Mission, a video game initially designed for and by the Chinese military, has been downloaded more than a million times.
It might look like just another shoot 'em up blood-fest but it is, in fact, China's latest propaganda tool.
It was designed as a training aid for Chinese soldiers and state-run television has show pictures of ranks of them merrily gaming away, controlling virtual People's Liberation Army troops in various battlefield scenarios.
Interestingly, the virtual enemy they're taking on appears at times to bear at least a passing resemblance to the US and its allies, raising questions about exactly what real-life scenarios they're training for.
But whatever the effect on soldiers, the decision to make the game available to the wider public was taken in order to instil patriotic values, the "core values" of the military, according to army sources.
Gu Kai, vice-president of the software developers behind the game, Giant Network Technology, says that he believes the game will help drum up new army recruits.
"I would hope that somebody will play the game and fulfil their dream," he says.
"Most young boys, from the bottom of their hearts, want to be a soldier. They like to fight, they like to win, and if this video game can make that dream come true, I won't be surprised."
The propaganda appears, in places, less than subtle. One of the game's stages recreates the "fiery atmosphere of camp life", according to one news report.
In one Shanghai internet cafe, almost every one of the 100 or so terminals is busy with someone locked in intense online combat with a wide variety of foes; goblin, alien or human.
One young man says he spends more than 10 hours a week in here, and he agrees that online games might be a powerful tool for influencing thoughts and ideas.
"It's possible," he says. "Most of the players here are young. A military video game could make you feel familiar with and then develop an affinity for the army."
Glorious Mission, then, is a swift about-face for the Chinese military as well as a sign that China isn't just censoring the internet, banning search terms and deleting posts which it does routinely, but also now trying to harness its power.
The country already has an army of Communist Party bloggers posting comments in support of the government.
The seemingly rehabilitated gaming industry is simply the latest weapon.
This year, reports on state media suggest that the authorities might be about to officially abandon their moral scruples about the gaming industry altogether, with the consoles ban apparently coming up for review.
Gu Kai from Giant Network Technology tells me that he thinks China is now well and truly over it.
"I've met some of the officials," he says. "They stopped worrying about video games years ago."
"Most of them are promoting gaming as a new, hopeful and fast growing industry. At least here in Shanghai all the officials are very open and supportive."
China isn't the first to design a video game for military training purposes - Glorious Mission bears some resemblance to a game made 10 years ago, as a tool for the US military and also as a lure for army recruitment.
But influencing the thoughts of the wider public and attempting to mould and foster nationalist sentiment and loyalty is a more ambitious fight, and in China's virtual world, it's a fight that's likely to intensify.
China's Communist Party and its more than two-million-man army aren't supposed to like video games.