China is rapidly expanding its artificial intelligence-generated video industry, with cities across the country competing to attract filmmakers and technology...
China is rapidly expanding its artificial intelligence-generated video industry, with cities across the country competing to attract filmmakers and technology companies through subsidies, computing support and other incentives.
AI filmmaker Zhu Zhili said officials from cities and industrial parks across China have approached him about establishing an AI film business in their areas.
Zhu, who also heads the AI-generated content department at China Wit Media in Shenzhen, said he is approached regularly by cities seeking to attract AI technology companies and production studios.
The competition reflects China’s broader push to integrate artificial intelligence into different parts of the economy, including film and video production.
Local governments are offering support to AI filmmakers in a strategy similar to previous efforts to develop industries such as electric vehicles, solar panels and robotics.
Shenzhen has become an important centre for AI filmmaking because of its technology ecosystem. Zhu operates his personal studio from a shared workspace supported by the city government and Hong Kong Polytechnic University.
AI dramatically cuts production costs
One of the biggest attractions for filmmakers is the falling cost of producing AI-generated video.
According to China’s state broadcaster CCTV, the cost of producing AI short dramas fell from about 5,000 yuan ($747) per minute to several hundred yuan per minute during the first half of 2026.
Filmmakers say the technology allows them to create scenes that would traditionally require large production crews, locations and expensive equipment.
Pan Xiaojun, a postgraduate film-directing student in Hainan, told Reuters that a conventional wedding scene could cost about 60,000 yuan, while an AI-generated version could cost about 1,400 yuan.
Pan also said government subsidies and rent waivers helped reduce his computing costs.
Other Chinese cities are introducing similar incentives.
Shanghai introduced measures in May aimed at accelerating AI-powered micro-drama production, including access to computing power and cloud-based AI models.
Beijing has established a 260 million yuan fund to support audiovisual technology, while its Huairou district provides vouchers to help AI short-drama producers reduce computing costs.
Shenzhen is also offering technical assistance for video production, visual effects and content generation, as well as subsidised office space.
Major streaming platform iQIYI has also increased its focus on AI content, with chief executive Gong Yu saying in August that the company was “all-in” on AI and was providing subsidies to some creators whose AI productions are streamed on the platform.
Signs of an overcrowded market
The rapid growth has also raised concerns about whether the market can absorb the amount of AI-generated content being produced.
DataEye estimates that 221,900 new AI shows were launched on Douyin during the first half of 2026. However, only 1,055 attracted more than 100 million views, a benchmark commonly used to measure significant success on the platform.
The figures suggest that while production has expanded rapidly, only a small proportion of content is achieving very large audiences.
The situation has prompted comparisons with other Chinese industries where heavy investment and rapid expansion have sometimes resulted in intense competition and pressure on prices.
For AI video producers, the low cost of production makes it easier to create more content, but it also lowers the barriers for competitors entering the market.
First major AI film receives approval
China’s National Film Administration has granted a public-screening licence to “Sanxingdui: Future Memories,” a 90-minute science-fiction film produced by major Chinese studio Bona Film Group.
The film is scheduled for theatrical release this year and is the first AI film produced by a major Chinese studio to receive regulatory approval for theatrical release in China, according to Reuters.
The development marks a significant step for AI-generated filmmaking in the Chinese commercial film industry.
AI-produced content is also increasingly being taken outside China.
Director Cao Yiwen premiered an AI-animated film at the World AI Film Festival in Cannes in April and said China was developing rapidly in the sector.
Copyright and employment concerns
The expansion of AI filmmaking has also created concerns among actors, voice performers and audiences.
Chinese actors have raised questions about the use of their likenesses in AI-generated films, while concerns have also emerged over potential copyright violations and the impact of AI on employment for voice actors.
Some consumers have complained about plagiarism and the lack of originality in AI-generated productions.
A 22-year-old AI content viewer quoted by Reuters criticised creators who use other people’s original characters or dance clips in AI-generated material without permission or credit.
China requires AI-generated content to be clearly labelled, but Reuters reported that the country has not yet introduced comprehensive copyright rules specifically governing such content.
The absence of clearer rules could become increasingly important as AI-generated films and other video products enter cinemas, streaming platforms and overseas markets.
China seeks an early lead
Despite the concerns, AI-generated video production continues to expand in China as local governments, technology companies and filmmakers invest in the sector.
The approach is consistent with China’s wider strategy of using government support and industrial policy to develop emerging technologies and build domestic production capacity.
For filmmakers such as Zhu, government support has helped make AI production more accessible through cheaper computing, subsidised facilities and other assistance.
The rapid expansion, however, leaves the industry facing questions over whether demand will keep pace with production, how copyright will be regulated and how traditional film jobs will be affected.
For now, China’s AI video sector is moving from experimentation towards commercial production, with filmmakers increasingly looking beyond the domestic market.
