The Pulse
China’s AI Film Industry Grows as Cities Compete for Creators
Chinese cities are offering AI filmmakers incentives as production costs fall and AI video output surges. Separately, a 90-minute science-fiction film has received a license for theatrical release in China.
AI.info Team ·
221,900 shows, but few break through
China’s AI-video boom produced 221,900 new shows on Douyin in the first half of 2026, but just 1,055 drew more than 100 million views, according to DataEye figures cited by Reuters in a report published September 24. The gap puts a hard question behind the rush to turn AI filmmaking into an industry: can a flood of cheap productions find enough viewers?
Local governments are competing to attract studios with subsidies, computing resources and discounted rent. Separately, China’s National Film Administration has licensed a 90-minute AI science-fiction film for theatrical release, the first AI film from a major Chinese studio to receive that approval, Reuters reported.
Cities compete for studios and creators
AI filmmaker Zhu Zhili said officials from cities and industrial parks across China have contacted him about setting up a business in their areas.
“I am approached every day by a range of cities, from major metropolitan areas to smaller localities,” Zhu said, “hoping we can establish either technology or the company there.”
Shenzhen, where Zhu set up his studio, is offering technical support and subsidised rent to attract AI film talent. Shanghai introduced measures in May that provide computing power and cloud-based AI models for micro-drama production, while Beijing has a 260 million yuan fund for audiovisual technology. Huairou district, a film-industry hub, offers vouchers to reduce AI short-drama computing costs.
Zhu described China’s environment for AI filmmakers as offering “cheap rent, living allowance and computing support.” His personal studio operates from a shared workspace with support from the Shenzhen city government and Hong Kong Polytechnic University. The competition is intended to build a production base, not just draw individual creators: cities are seeking clusters of AI filmmakers, studios and distribution businesses.
Lower costs put production within reach
The economics help explain the appeal. Reuters, citing state broadcaster CCTV, reported that the cost of producing AI short dramas fell from 5,000 yuan per minute to a few hundred yuan in the first half of 2026. Pan Xiaojun, a postgraduate film-directing student in Hainan, compared a conventional wedding scene costing him 60,000 yuan with an AI version he said he could make for 1,400 yuan.
Pan said local subsidies and rent waivers helped reduce his computing costs further. Streaming platform iQIYI is also offering some creators subsidies for AI content on its service; chief executive Gong Yu described the company as “all-in” on AI, according to Reuters.
Lower production costs can make it easier to experiment, but they also make it easier to produce more than audiences want. With only a small share of the new Douyin shows crossing the 100-million-view mark, the volume of output is not yet evidence of durable demand.
A cinema license raises the stakes
The 90-minute film, “Sanxingdui: Future Memories,” marks a step from mobile-first dramas toward theatrical distribution. Producer Bona Film Group said the film is due for release this year. Its license is a milestone for AI production, but it does not settle whether an AI feature can attract cinema audiences or sustain the broader industry that local incentives seek to build.
Concerns over unauthorized use of actors’ likenesses, voice work, plagiarism and originality remain. Reuters reported that China requires AI-generated content to be labelled but has not introduced clear copyright rules for it. The film’s planned release will test theatrical appetite; the rights questions remain unresolved.