China fuels rush to turn AI video into an industry

When Zhu Zhili went looking for a base for an AI film studio in China two years ago, one city stood out: Shenzhen, with its vast technology ecosystem in the south. This year the filmmaker says officials from cities and industrial parks across China call him almost every day with the same pitch: bring your AI film business here.

Zhu heads the AI content department at the Shenzhen production company China Wit Media.

Cities compete with subsidies and cheap computing

Local governments are promising technology clusters and subsidies to AI filmmakers and startups, repeating the industrial policy that made China's electric vehicles, solar panels and robotics globally competitive. Shanghai offered computing power and cloud-based models in May to cut the cost of AI micro-dramas and support distribution abroad. Beijing has a 260 million yuan audiovisual technology fund, while Shenzhen adds technical support and subsidised rent. Streaming platform iQIYI is "all-in" on AI, chief executive Gong Yu said in August.

Production costs fall

Producers are drawn by cost: in the first half of 2026 the price of making AI short dramas fell from 5,000 yuan ($747) a minute to a few hundred yuan, state broadcaster CCTV reported. Pan Xiaojun, a postgraduate film-directing student in Hainan, said a conventional shoot of a wedding scene might cost 60,000 yuan, while AI produced a comparable surreal scene for 1,400 yuan.

The risks are familiar from other state-backed sectors, where constrained demand keeps pushing prices down. In the first half of the year, 221,900 new AI shows appeared on Douyin, the Chinese version of TikTok, but only 1,055 passed 100 million views, a common success benchmark, the data firm DataEye says.

A backlash, and the big screen

Actors worry about the use of their likenesses, feeding concerns about copyright infringement and voice actors' jobs, and viewers complain about plagiarism and a lack of originality. The box-office success of the crudely animated, conventionally made film "Niu Lai" was read by some as a backlash against AI content. China requires explicit labelling for AI content but still lacks clear copyright rules.

The National Film Administration has granted a public-screening licence to the 90-minute sci-fi epic "Sanxingdui: Future Memories", the first AI film from a major Chinese studio approved for theatrical release; producer Bona Film Group says it is due out this year. Director Cao Yiwen premiered her AI-animated film at the World AI Film Festival in Cannes in April. "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 Industrial Revolution."