It's not that different to the Indian film industry, which produces more films per year than the US. The challenge will be not if China can rival Hollywood in terms of production and domestic popularity but whether it can challenge them in terms of exporting its films overseas. As huge as Bollywood is, it rarely draws audiences outside of India - besides those ex-pat Indian communities that exist in other countries. Hollywood's strength is less in the number of films it produces than in their near global popularity, which is something I suspect China (like India) will find far harder to match.
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