China fuels rush to turn AI video into an industry

When Zhu Zhili was looking for a base to set ​up an artificial intelligence film studio in China two years ago, there was just one clear choice: the southern city of Shenzhen with its vast tech ecosystem. This ‌year, AI filmmaker Zhu said he has fielded calls from officials in cities and industrial parks across China, ​all with the same pitch: bring your AI film business here.

“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.” Those appeals reflect a major push by China to embed artificial intelligence into every corner of the economy – including the latest movies showing at cinemas.

Local governments have responded by promising to build tech clusters and offering subsidies to ‌AI filmmakers and startups. That is straight out of a familiar industrial policy playbook, treating AI-generated content the way China built electric vehicles, solar panels and robotics into globally competitive industries.

The result is a fast-emerging industry of AI filmmakers, studios and streaming platforms in ‌China seeking an early lead in production techniques and distribution. China has created the “best environment” for AI filmmakers with “cheap rent, living allowance and ‌computing ⁠support,” said Zhu, who also heads the AI-Generated Content (AIGC) department at China Wit Media in Shenzhen.

Zhu runs his personal studio in ⁠Shenzhen from a shared workspace with the backing of the city government and Hong Kong Polytechnic University. While China’s all-out push for AI in film has been welcomed by filmmakers like Zhu, the industry faces growing risks familiar to other sectors showered with state support.

As companies step up production of goods like cars and ​consumer products, domestic demand remains constrained, driving down prices in what ‌many see as a race to the bottom. There are signs that AI video content may already be approaching overcapacity.

In the first half of the year, 221,900 new AI shows were launched on Douyin, the Chinese version of TikTok, but only 1,055 drew more than 100 million views, a typical benchmark of success, according to DataEye. Filmmakers say they are drawn to AI by the low production costs.

In the first ‌half of 2026, the cost of producing AI short dramas plunged from 5,000 yuan ($747) per minute to just a few hundred yuan, ​according to state broadcaster CCTV. “A normal wedding scene might cost me 60,000 yuan to shoot conventionally,” said Pan Xiaojun, a postgraduate film-directing student based in Hainan, southern China.

“But with AI, I can bring the same surreal scene to life ⁠for just 1,400 yuan.” Pan said subsidies and rent waivers from a local government in Hainan allowed him to push his computing costs down further. Other cities have also stepped up incentives.

Shanghai in May introduced measures to accelerate AI-powered micro-drama production, offering computing power and cloud-based AI models to cut costs and ‌support overseas distribution. Beijing has a 260 million yuan fund to support audiovisual technology.

Its Huairou district, a hub of China’s film industry, offers producers of short AI dramas vouchers to reduce computing costs. Shenzhen is also stepping up efforts to attract AI film talent, offering technical support for video production, visual effects and content generation, as well as subsidised rent.