On the surface, it may seem that the box office in China is booming, with record-breaking grosses. Much of this year’s success has been due to a single film, NE ZHA 2, also known by its full title NE ZHA: DEMON CHILD CONQUERS THE SEA.
The animated movie is China’s highest-grossing movie ever, with more than $2B in worldwide sales. It is the highest-grossing movie in the world in 2025 and still holds that position at the end of the year.
However, the success of NE ZHA 2 has papered over widespread anxiety about the local film industry, which has produced new movies that have not done particularly well at the box office.
While China has the second-highest box office market in the world, the exhibition sector may have overextended itself by building out 80,000 movie theatre screens, twice the number in the U.S. and Canada.
NE ZHA 2 accounts for over 50% of the Chinese box office so far in 2025, and the overall market is down 12% compared to comparable earnings from the period before the pandemic. Bloomberg columnists Sohee Kim takes a deep dive into the stress Chinese studios and exhibitors are feeling these days, for an industry and market that was at one point on track to become the largest in the world.
Industry leaders who gathered last month at the Shanghai International Film Festival emphasized the need for the Chinese film industry to cut back the budgets for new film production by as much as half, and reduce the number of movies it releases each year.