Chinese Cities Offer Subsidies and Cheap Computing to Lure AI Film Studios
Local governments across China are competing to attract AI filmmakers with subsidised rent, living allowances, and cheap computing power, as reported by Reuters on Friday.
Incentives for Growth
Zhu Zhili, who set up an AI film studio in Shenzhen two years ago, shares that officials from various cities now approach him daily, requesting him to relocate his technology or company. He also manages the AI-generated content department at China Wit Media, a Shenzhen production company.
These incentives mirror China's strategy for building its electric vehicle, solar, and robotics industries. In May, Shanghai began providing computing capacity and hosting AI models for micro-drama producers. Beijing has established a 260 million yuan ($39 million) fund for film and video technology, while Huairou District in Beijing's film industry offers vouchers that reduce computing bills for AI short dramas. Shenzhen provides technical support and lower rent for AI film talent.
Rapid Cost Reduction
Production costs have declined significantly. According to state broadcaster CCTV, creating a minute of AI short drama cost 5,000 yuan at the beginning of 2026, dropping to just a few hundred yuan by mid-year.
Filmmaking student Pan Xiaojun from Hainan told Reuters that he could craft a surreal wedding scene with AI for 1,400 yuan, compared to 60,000 yuan for traditional production. Local subsidies and rent waivers further reduced his computing expenses.
Streaming Platforms Join the Trend
iQIYI CEO Gong Yu revealed in August that the company is fully committed to AI, now subsidizing some creators who publish AI content on its platform. The National Film Administration has also approved Sanxingdui: Future Memories, a 90-minute science fiction film from Bona Film Group, for cinema release. However, no other AI film from a major Chinese studio has received such approval yet.
Supply vs. Demand and Growing Backlash
Between January and June, 221,900 AI shows were uploaded to Douyin (China's TikTok). Only 1,055 of them achieved over 100 million views, according to data firm DataEye. The backlash is growing, with actors concerned about the use of their likenesses, voice actors fearing for their jobs, and viewers complaining about plagiarism. Some view the box-office success of Niu Lai, a crudely animated film made without AI, as a response to this trend.
While China requires AI-generated content to be clearly labeled, it has yet to establish copyright rules. Filmmaker Cao Yiwen, who premiered an AI-animated film in Cannes in April, told Reuters that Europe is awaiting China's decision on these laws.