The Hary Potter film is taking China by storm
New regulations issued by the government allow any citizen to apply to make a film, in theory.
In the past, films could only be made under the auspices of a small number of state-owned film studios.
It is hoped that the move will help revive China's film industry, which is facing a sharp increase in competition as World Trade Organisation rules allow more foreign films into the country.
Film producers have described the new rules as an important symbolic step in the opening up of China's movie industry.
Yet any films made will still require the approval of the country's censors.
But the new rules break the monopoly of China's state-run film studios, which, since the communist revolution, have had the exclusive right to produce and release films.
Now anyone who can raise the money will be allowed to apply for a permit to make a movie.
Over the past decade, a number of Chinese filmmakers have tried to set up their own production companies.
But they could only make their films in partnership with a state-run studio.
These studios not only charged a fee, but could insist that their own staff be used to film the story.
They would also take a cut of the film's royalties.
Losing money
Filmmakers who tried to bypass the system - shooting their films independently and releasing them at festivals abroad - had their works banned in China.
It is hoped that the new rules will encourage more talented directors to make films in China at a time when the products of many of the country's state-run studios have been struggling to win audiences, and many cinemas are losing money.
China's entry into the World Trade Organisation will also bring a sharp rise in the number of foreign films allowed into the country's cinemas.
Chinese media have already described the success of Warner Brothers' Harry Potter movie as a warning to the domestic industry.
The film has opened in cinemas across China this week, with the teenage boy did the voiceover for the role of Harry Potter in Mandarin being mobbed at public appearances.
But state-run film studios could also benefit from foreign involvement in China's film industry.
Under the new rules, they will be allowed to seek investment from abroad.