Across China, municipal governments are deploying financial incentives to draw AI production studios to their jurisdictions. The strategy mirrors tactics used to build the nation's electric vehicle, solar panel and robotics sectors. Shenzhen-based filmmaker Zhu Zhili, who founded his AI studio two years ago and also heads the AI-generated content division at China Wit Media, reports receiving daily calls from officials in cities large and small urging him to relocate.
The support mechanisms vary by location. Shanghai began offering computing resources and model-hosting services to micro-drama creators in May. Beijing established a 260 million yuan ($39 million) fund dedicated to film and video technology, while its Huairou district—a traditional hub for Chinese cinema—distributes vouchers that reduce computing expenses for AI short-form drama producers. Shenzhen provides technical assistance and reduced rental rates to AI filmmaking talent.
Production economics have shifted dramatically. State media outlet CCTV reported that generating one minute of AI short drama cost 5,000 yuan in early 2026, but fell to just a few hundred yuan by mid-year. Film student Pan Xiaojun, based in Hainan, created a surreal wedding sequence using AI for 1,400 yuan—a fraction of the 60,000 yuan conventional production would have required. Local subsidies and rent reductions further compressed his computing outlays.
Streaming platforms have joined the push. iQIYI's chief executive Gong Yu announced in August that the company was committing fully to AI and now provides subsidies to certain creators publishing AI-generated material on its platform. The National Film Administration approved Sanxingdui: Future Memories, a 90-minute science-fiction feature from Bona Film Group, for theatrical distribution—marking the first major-studio AI film to receive such clearance.
Yet supply appears to be outpacing viewer appetite. Between January and June, Douyin—ByteDance's Chinese version of TikTok—hosted 221,900 AI-generated shows. However, only 1,055 of these productions exceeded 100 million views, according to analytics firm DataEye.
Resistance is mounting on multiple fronts. Performers worry about unauthorized use of their likenesses, voice actors fear job displacement, and audiences raise plagiarism concerns. The box-office performance of Niu Lai, a crudely animated film produced without AI technology, has been interpreted by some as audience pushback against the trend.
China mandates that AI-generated content display clear labels, but copyright frameworks remain undefined. Filmmaker Cao Yiwen, who screened an AI-animated work at Cannes in April, told Reuters that Europe is watching to see whether China will establish those legal standards.
Source: The Next Web
