Zhang Yimou's House of Flying Daggers topped Chinese box office records this year, grossing 153 million yuan (US$18.5 million), ahead of Lord of the Rings: The Return of the King.

Last year's top selling movie here was Zhang Yimou's Hero; domestic films have topped China's box office for the past three years.

China's budding film industry is expanding at a fast pace, with 212 movies produced this year compared to 140 in 2003 and 112 in 2002, said Tong Gang, director of the film bureau of the State Administration of Radio, Film and Television.

He was speaking at an ongoing national meeting in Boao, Hainan Province. Over 80 percent of the domestically produced films are financed by private or overseas investments, including Zhang Yimou's Flying Daggers.

The quality is also improving, evidenced by director Lu Chuan's low budget Kekexili: Mountain Patrol, which became the first Chinese mainland film to win best feature at Taiwan's coveted Golden Horse Awards.

Total box office revenue this year exceeded 1.5 billion yuan (US$182 million), a 50 percent increase over last year, with Chinese films making up 55 percent of the market share.

In a bid to protect the industry, only 20 foreign films are allowed to be shown in cinemas each year, though pirated copies of the latest blockbusters are available everywhere.

The improvement in both the output and quality of China-made films has in turn given impetus to the development of the whole film market. A growing number of domestic and overseas companies have started investing in cinemas in the country, an area many consider to be ripe for growth.

China now has 1,188 cinemas with 2,396 screens, or about one screen for every 650,000 people. This compares with the more than 30,000 cinemas in the US.

(CRI.com, Xinhua News Agency December 24, 2004)