Last year can be viewed as a turning point for the domestic film industry, as Chinese films accounted for 58 percent of the year's 21.7 billion yuan ($3.6 billion) box office returns, up from 48 percent in 2012. This was despite the reduced administrative protection for domestic films, with the number of foreign films allowed to be screened in China up since 2012, when the import quota was increased.

So instead of worrying about whether the Chinese film industry can survive or not, the focus is now on its sustainable progress, and there were some advantageous changes in 2013 that should ensure Chinese films are more competitive in the future.

Most notably there has been a change in audience structure, as audiences have become younger. According to a recent survey of Entgroup, a research institute of China's entertainment industry, the average age of film viewers has fallen to below 25, and it is still dropping. Part of the reason for this is more cinemas and screens have been opened in second- and third-tier cities, and the new cinemagoers in the smaller cities are mainly young people. A total of 5,077 new screens opened in China last year, and the box office returns from first-tier cities accounted for only 47.8 percent of the total box office. It is predicted that the proportion of returns from first-tier cinemas in the total box office will continue to fall over the next few years.

This in turn has led to a change in the types of films being made, as filmmakers are targeting their product at teenagers and young adults. Among the top ten box office earners in 2013, seven films were domestic films, of which five targeted an audience born after 1980. For example, debutant director and famous actress Zhao Wei's So Young portrays the lives of a group of students in the 1990s and their loss of innocence. Not surprisingly, it was a huge hit and it was the year's third-highest earner at the box office, raking in about 720 million yuan.

To some extent, this change in audience structure and film subjects provides a solid foundation for a sustainable market in the future, and it is predicted that China will grow from being the second-largest film market to the largest in the next 10 years, surpassing that of the United States.

In addition to this change in the domestic market, there have been positive developments in the structure of China's film industry, as it is has transformed from a large-scale and integrated studio system to decentralized, flexible and specialized film industry, a transformation similar to the one Hollywood experienced in the 1950s and 1960s.