According to an article on InformationWeek, the Chinese government has banned the trading of virtual money for real goods and services. So yeah, China has banned gold farming.

In a joint release issued Friday, China's Ministry of Culture and Ministry of Commerce said, "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." The release also says virtual money trade in China topped several billion yuan last year after rising around 20 percent annually. According to InformationWeek, one billion yuan is currently equal to about $146 million.

The Chinese government also spelled out the definition of "virtual currency" for the first time, stating it includes "prepaid cards of cyber-games." The release says the most popular Chinese online credits are "QQ coins" issued by Tencent.com, which has at least 220 million registered users. The Web site said it supports the new rule.