China is building an artificial intelligence film industry through local subsidies, technology clusters and infrastructure support, mirroring its earlier industrial-policy push in electric vehicles, solar panels and robotics. AI filmmaker Zhu Zhili said cities and industrial parks across the country are competing to attract his business, after he established a studio in Shenzhen. Production costs have fallen sharply, helping filmmakers create short dramas and complex scenes more cheaply, but the rapid expansion is producing signs of market saturation. DataEye counted 221,900 new AI shows on Douyin in the first half of the year, while only 1,055 exceeded 100 million views. Shanghai, Beijing, Shenzhen and Hainan have introduced various forms of support, and iQIYI is subsidizing some AI content. The National Film Administration has approved the first AI film from a major Chinese studio for theatrical release, while copyright, likeness, employment and originality concerns are prompting resistance. Chinese AI film production is also beginning to reach international audiences.