China is rapidly expanding efforts to turn AI-generated video into a commercial industry, with local governments competing to attract filmmakers, studios and technology startups. Cities and industrial parks are offering incentives as they seek to establish themselves as centres for AI-powered content production.
AI filmmaker Zhu Zhili said he initially chose Shenzhen as the base for his studio because of the city’s established technology ecosystem. This year, however, he has received approaches from officials in cities across China encouraging him to move or establish operations there.
The push reflects a broader strategy to integrate artificial intelligence into different parts of the economy, including film and digital entertainment. Local governments are promoting technology clusters and offering support such as subsidies, affordable workspace and computing resources to attract AI businesses.
Shenzhen has also introduced support programmes for its digital creative industries, covering areas including films, animation, games and short-form dramas. Its 2026 programme includes financial support for qualifying digital creative projects and encourages the use of AI-generated content.
For filmmakers, AI can significantly reduce some production costs and allow smaller teams to experiment with formats that previously required larger budgets. At the same time, the rapid expansion is raising concerns about whether the market could produce more AI video content than audiences can absorb.
The development also highlights a familiar challenge for government-supported industries: attracting investment and production capacity does not necessarily guarantee sustainable commercial demand. As China builds its AI video ecosystem, the industry will need to demonstrate that lower production costs can translate into commercially successful and widely distributed content.
