Two years ago, when filmmaker Zhu Zhili wanted to set up an AI film studio in China, there was really only one obvious choice: Shenzhen, with its deep tech ecosystem. Zhu says officials from cities and industrial parks across the country now call him constantly, all making the same pitch bring your AI film business here. He describes being approached regularly by a range of localities, from major metropolitan areas to smaller cities, each offering help setting up either the technology or the company itself on their turf.
An Industrial Playbook Applied to Film
Those calls reflect something bigger: China’s push to weave AI into every corner of its economy, film included. Local governments are responding with tech clusters and subsidies for AI filmmakers and startups – the same industrial strategy China previously used to turn electric vehicles, solar panels, and robotics into globally competitive industries.
The result is a fast-growing ecosystem of AI filmmakers, studios, and streaming platforms all racing for an early lead in production techniques and distribution. Zhu, who also heads the AI-Generated Content department at China Wit Media in Shenzhen, describes China as having built the best environment for AI filmmakers, offering cheap rent, living allowances, and computing support. He runs his own Shenzhen studio out of a shared workspace backed by the city government and Hong Kong Polytechnic University.
The Real Draw: Dramatically Lower Costs
What’s actually pulling filmmakers in is cost. In the first half of 2026, producing AI-generated short dramas in China dropped from around 5,000 yuan per minute to just a few hundred yuan, according to state broadcaster CCTV.
Pan Xiaojun, a postgraduate film student in Hainan, put the difference in concrete terms: a wedding scene that would normally cost him 60,000 yuan to shoot conventionally can now be recreated with AI for around 1,400 yuan – with local subsidies and rent waivers pushing his computing costs down even further.
Other cities are competing hard for a piece of this. Shanghai introduced measures in May to accelerate AI-powered micro-drama production, offering computing power and cloud-based AI models to cut costs and support overseas distribution. Beijing has committed a 260 million yuan fund for audiovisual technology, with its Huairou district – a longtime hub of China’s film industry offering AI drama producers vouchers to offset computing expenses. Shenzhen, meanwhile, is offering technical support for video production, visual effects, and content generation, alongside subsidized rent.
Major streaming platform iQIYI has gone all-in as well. CEO Gong Yu said in August the company is now offering subsidies to creators producing AI content for its platform.
Signs the Industry May Already Be Oversaturated
Despite the enthusiasm, there are early warning signs of the same overcapacity problem that’s hit other Chinese industries flooded with state support. In the first half of the year alone, 221,900 new AI shows launched on Douyin – China’s version of TikTok but only 1,055 of them crossed 100 million views, the typical benchmark for success, according to research firm DataEye.
A Milestone Film, and a Real Backlash
The industry did notch a genuine milestone: China’s National Film Administration granted a public-screening license to Sanxingdui: Future Memories, a 90-minute AI-produced science-fiction epic, the first AI film from a major Chinese studio approved for theatrical release. Producer Bona Film Group says it’s set for release later this year.
But acceptance hasn’t been universal. Chinese actors have raised concerns about their likenesses being used in AI-generated films, fueling broader worries about copyright infringement and job losses among voice actors. Consumers have voiced frustration too, criticizing plagiarism and a lack of originality in AI content. Wen, a 22-year-old AI content fan, said some people directly blend other people’s original characters or dance clips into AI-generated content without giving any credit, adding that she considers that behavior completely unacceptable.
Some saw the surprise box-office success of Niu Lai – a conventionally produced, deliberately crude animated film as a quiet cultural pushback against the AI wave. China currently requires clear labeling for AI-generated content, but has yet to introduce concrete copyright rules governing it.
China Positions Itself as the Global Leader
Even with these growing pains, AI film production in China is accelerating and increasingly reaching audiences abroad. Director Cao Yiwen premiered her AI-animated film at the World AI Film Festival in Cannes in April, and said she believes China is already leading the field globally.
She said France and the rest of Europe are still watching and waiting to see whether China will introduce clear laws, framing the moment in sweeping terms arguing that since China fell behind in the first two industrial revolutions, this might well be the Third Industrial Revolution.
