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But it ran into a cash crunch in late 2016 after expanding too fast. Although LeEco founder Jia Yueting resigned from all his positions at Leshi due to unpaid debts and the financial crisis, he remains Leshi's largest shareholder.

But further easing monetary policy should not be on the agenda, suggested Liu. "Even a looser monetary money could not solve the problem of slipping potential GDP growth".

But officials say that challenges remain. "E-sports is a brand-new sport burgeoning due to the development of Internet. The structural and training barriers to the sound development of the industry are still daunting," said Ding Dong, director of Information Center of China's General Administration of Sports.

But even before the permit suspension was announced, the number of mainland travelers visiting the island had declined, as Tsai and her administration have poisoned sentiment on the island toward mainland tourists, dampening their enthusiasm to visit.

But Tang cautioned about the downside risk from shrinking external demand, as great uncertainties remain over the resumption of overseas economic activity.