The establishments on which the government brought down their hammer were operated illegally and didn't abide by the gameplay restrictions mandated by the government. In one southern border city alone, officials shut down over 500 illegal gaming cafes. They cited one case where there was as many as 30 computers packed into a 40 square meter room. If you're more an english standard kind of person, that would be a room about 16 feet by 26 feet. You have to hope they had a good air conditioning unit!
What I found interesting was one official's comment that, "Although China's online gaming industry had been hot in recent years, online games are regarded by many as a sort of spiritual opium and the whole industry is marginalized by mainstream society." While their description of these net cafes does conjure up an image not entirely unlike that of an opium den, you have to wonder whether they see the real problem underlying China's addiction to MMOs. If players are so desperate to escape the hopelessness of their everyday lives that they'll literally sit and play a game at a computer until they die, shouldn't it be the conditions they live in that are changed, and not their opiate of choice, whether real or in a fantasy?