China’s film industry shook off global financial crisis woes last year and is on a fast track for more healthy growth this year, the country’s top regulator said in its annual review of the biz.

A record 406 films were made in 2008 and box office take, excluding the rural market and factory screenings, was up 30% to 4.3 billion yuan ($635 million), according to the report from the State Administration of Film, Radio and Television.

“In 2008, all industries in countries around the world have suffered from the financial crisis in varying degrees. But the Chinese film industry has continued to achieve encouraging results,” the report said.

Homegrown films accounted for more than 60% of the total box office. China has become one of the world’s major film-producing countries after six years of continuous development, the report said.

Revenues from Chinese films’ overseas sales were $378 million, while ad revenues from movies broadcast on national movie channels were $229 million.

Top performer was Feng Xiaogang’s “If You are the One” ($48 million), just pipping John Woo’s “Red Cliff (Part I)” ($47 million). Surprise hit “Painted Skin” took $34 million, ahead of “CJ 7” with $29 million, “The Forbidden Kingdom” with $27.5 million. “Kung Fu Panda” and “Quantum of Solace” were in sixth and seventh place respectively.

Exhibs built 118 multiplexes last year, bumping the total up 8% to 1,545 theaters. The number of screens jumped 16% to 4,097.

However, movie tickets are too expensive relative to average incomes, and the biz is still lagging in small and medium-sized cities, SARFT said.

“Therefore, along with the active development of domestic film production, promoting the construction of cinemas should be continued,” the report said.

The fastest growing B.O. is in the capital, Beijing, up from $53 million in 2007 to $75 million in 2008.

B.O. grew particularly strongly during vacation periods, such as Chinese New Year and October holidays, even though the film market felt the impact of a number of events such as January’s snow storms, the Sichuan earthquake in May and the Olympic Games in August.

Production was dominated by the major players — China Film Group, New Picture Company, Huayi Brothers and Shanghai Film Group.

However, one of the year’s big hits, “Painted Skin,” which took in $29 million in 19 days, came from a small shingle, Ningxia Film Studio.

SARFT said the success was an encouragement for other small and medium-sized enterprises.

Many cinemagoers live in rural areas, and there was growth in the use of digital cinema technology to reach the market. There were 7.15 million screenings in rural areas last year.

A highlight for the biz was the completion of the National Digital Cinema Production Base at Huairou near Beijing at a cost of nearly $293 million on July 31.