The Playstation 2 was banned from sale to Iraq because it was considered too powerful and liable to be used for military purposes i.e. designing weapons of mass destruction.
"Sony applied for a special export permit to get its new console to the rest of the world, but a few countries were blacklisted. Libya, Iran, Iraq, and North Korea were considered potentially likely to use the console for nefarious purposes."
China was also in that list.
WASHINGTON -- Bad news for Chinese generals: The United States Commerce Department has just determined that the new Sony Playstation II, available later this year, is powered by an American-made chip so powerful that Washington would have to be notified before it could be shipped to China. If the final destination were a company, institute or household linked to the Chinese military, a lengthy review would be required to make sure America's most sophisticated technology does not fall into the hands of bomb makers.