According to the official news agency most of the net cafes were closed down because they were operating illegally.More info at BBC
Chinese net cafes operate under a set of strict guidelines and many of those most recently closed broke rules that limit how close they can be to schools.
China closed 12,575 internet cafes at 2004 year-end

BBC reports that the Chinese goverment closed 12,575 internet cafes in the last months of last year.