I've heard this but can't really search for verification. Supposedly this law forces all Chinese videogames to be set in fantasy settings. Nothing in the real world.
If this law exists I argue it should be removed. It's holding their industry back from making any culturally relevant content because nothing can be set in our world, about real lives, people or places. You'll never get a Death Stranding or Metal Gear out of China while it exists. They should untether their industry so it can produce more of cultural relevance.
Can anyone verify?
Sure but it either has to be in a level of abstract that it will go over heads of the average person or else I assume it will not fly with censors. No renaming America to Yankland and getting away with it I assume, given that I've literally never seen that kind of thing made over there.