By Josh Ye

July 27, 2023 - 11:01 AM EDT

HONG KONG, July 27 (Reuters) - China's video game player population has grown to a record of 668 million, a government-run game industry association said on Thursday, as the world's biggest gaming market returns to growth after a bruising crackdown.

The number of gamers, which is accurate as of end-June, represents about half of the population.

Industry association CGIGC, which announced the data at an industry conference in Shanghai, also said sales revenue of the domestic gaming market reached 144.263 billion yuan ($20.23 billion) for the first half of this year.

"Against the backdrop of a sluggish global gaming market, China's gaming industry is gradually emerging from a trough and showing an upward trend," Zhang Yijun, a director at the CGIGC, told the conference.

"Facing the challenges of the second half of the year, we still need to boost industry confidence."

China's gamer population shrank for the first time last year amid a sweeping, months-long government crackdown on the industry over gaming addiction concerns.

The crackdown wiped out significant revenue and market value for many domestic gaming giants including Tencent Holdings (0700.HK) and NetEase (9999.HK).

However, gaming revenue has yet to return to a pre-crackdown level. Sales revenue fell from 150.493 billion yuan in the first half of 2021 to 144.263 billion this first half.

Authorities stopped approving new games for nearly eight months between 2021 and 2022 as part of the crackdown, but have since loosened regulations.

Regulators approved the latest batch of game licenses on Wednesday, allowing 88 games to hit the market for the month of July.

Alicia Yap, an analyst at Citi Bank, wrote in a note on Wednesday that up to 90 games were approved each month, totaling 1,000-1,100 domestic games in the whole of 2023, or almost double 2022 figures.

"We remain confident about a steady domestic game approval process heading into (the second half of this year)," Yap wrote.

However, state-media Securities Daily said in a separate report on Wednesday that the actual rate of game launches remains sluggish, with only 23 out of the 88 games approved as of January being launched or posting a confirmed launch date.