China expands AI-driven film industry through government subsidies

China is rapidly developing an AI-driven audiovisual industry, mirroring the growth models previously seen in its electric vehicle and solar sectors. Local governments are actively competing to attract AI creators by offering subsidies, low-cost office rentals, and access to subsidized computing power and cloud services. Cities like Shanghai and Shenzhen are leading these efforts.

The primary driver for this shift is a dramatic reduction in production costs. For example, a wedding scene that traditionally cost 60,000 yuan can now be produced using AI for approximately 1,400 yuan. Data from CCTV indicates that the cost to produce a one-minute AI short film dropped from 5,000 yuan at the start of 2026 to just a few hundred yuan within six months.

This technological explosion has led to a massive surge in content volume. On the platform Douyin, approximately 221,900 new AI-generated productions were released within a six-month period. However, the industry faces challenges regarding quality and engagement; less than 0.5% of these productions achieved more than 100 million views, leading to concerns about potential overproduction or a market bubble.