Written by Seekriti Saha
Two years ago, when Zhu Zhili, an AI filmmaker, went looking for a place to start off his studio, the southern city of Shenzhen was the obvious pick. The city’s tech ecosystem was the perfect fit. “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.”
This push captures something larger. China is treating AI-generated video with the same importance it had once treated electric vehicles, solar panels and robotics, which is a frontier industry worth building through direct government intervention. Cities are rolling out aided computing power, rent waivers and living allowances to attract AI filmmakers into local tech clustering, betting initial infrastructure investment that will turn into a long-term industrial domination.
“A normal wedding scene might cost me 60,000 yuan to shoot conventionally,” said Pan Xiaojun, a postgraduate film-directing student from Hainan, located in southern China. “But with AI, I can bring the same surreal scene to life for just 1,400 yuan.”
Across the industry, the cost of production of AI short dramas dropped from about 5,000 yuan per minute to just a few hundred yuan in the first half of 2026, per a figure from state broadcaster CCTV.
Local governments have moved swiftly to capture this transformation. Shanghai introduced measures in May 2026 to accelerate AI-powered micro-drama production, grouping cloud computing support for creators looking to allocate overseas. Beijing has set aside a 260-million-yuan fund for audiovisual technology, with its Huairou district, which is the hub for the traditional film industry, issuing computing vouchers, especially for AI drama producers. Shenzhen continues to offer technical support across production and visual effects and at subsidised rent to house talent like Zhu.
Streaming platforms are leaning in too. iQIYI’s CEO Gong Yu said in August that the platform was “all-in” on AI, offering creator subsidies for AI content on its service.
DataEye numbers depict that of the 221,900 new AI shows launched on Douyin in the initial half of the year, only 1,055 crossed 100 million views, which is the industry’s approximate benchmark for a hit. That discrepancy between output and audience engagement is a pattern familiar to anyone who has tracked China’s EV or solar sectors, in which state support produced overcapacity and price wars eventually.
Chinese actors have raised alarm over the unauthorised use of their semblances in AI-generated films, while voice actors are fearing of being displaced altogether. Consumers, meanwhile, are vocal about plagiarism as AI creators lift original characters and dance sequences from other creators without any credit. China does require AI-generated content to be explicitly labelled but has not introduced any copyright rules specific to AI production, which leaves a legal vacuum that both creators and critics say needs the government’s urgent attention.
The National Film Administration recently granted a theatrical release licence to Sanxingdui: Future Memories, a 90-minute AI-produced science-fiction film from Bona Film Group which is the first AI feature from a major Chinese studio cleared for cinema release. “France and the rest of Europe are still watching and waiting to see whether China will introduce clear laws,” she said. “We fell behind in the first two industrial revolutions, so perhaps this is the third,” director Cao Yiwen, who premiered an AI-animated film at the World AI Film Festival in Cannes in April, told reporters.
Not everyone in China is convinced AI is the future of storytelling, though. The runaway box-office success of Niu Lai, which is a conventional animated, deliberately unpolished film, has been read by film industry watchers as a quiet consumer backlash against the AI-content wave, a signal that audiences may still value craft and originality over speed and cost.
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