Rumors abound on China's Internet that Microsoft (MSFT) is in a secret negotiation with local online game operator The9 (NCTY) to have the firm work as its first agent for the Xbox 360 game console in China.

Xbox 360 has already entered 37 countries and regions across the world, but it is said to face policy, piracy and profit-making limits in entering the China market. Microsoft hopes to evade these relevant risks through the cooperation with The9.

Microsoft has denied the rumors. A representative from Microsoft China says that Microsoft has indeed signed a cooperation agreement with The9, but it is just a memorandum of understanding and Xbox 360 business has not been included in the agreement.

In late December 2006, Microsoft first unveiled its Xbox 360 business in Beijing and expressed its optimism about the Chinese game market.