BEIJING — Animation is a real buzzword in China these days, and biz mandarins in the government are obsessed with finding ways of competing with foreign product, especially “SpongeBob SquarePants” and the hugely popular Japanese anime and manga skeins beloved of Chinese rugrats.

At Annecy, the Chinese entries are on the less populist side. In the short-film category, China’s entry is “The Winter Solstice,” by Chen Xi and An Xi, in which a man reminisces shortly before his death, while Mao Xuebing’s “A Bacchanal at Home” uses traditional wine culture in China to explore family issues in a comic way over 104 episodes.

With 367 million people under the age of 18, there is great potential for the Chinese toon market, and the biggest hit in animation this year was Zhao Chongbang’s “Pleasant Goat and Big Big Wolf,” produced by SMG, Guangdong Creative Power Entertaining and Beijing UYoung Media.

A simply told story about a battle of wits between a herd of goats and a couple of wolves, pic earned more than 80 million yuan ($11.8 million) at a cost of just $880,000, coming in second only to “Kung Fu Panda.” Such remarkable success for a relatively low-budget project helps soothe fears that China is not good at making its own toons.

By tapping into a strong fanbase reared on 500 episodes of a TV skein aired on 50 channels nationwide, “Pleasant Goat” beat out another successful homegrown animated film, “Storm Rider – Clash of Evils,” in 2008, which still made a respectable $4.8 million. A sequel is in the works, and is due by next Chinese New Year.

In 2008-09, China was producing 324 animated skeins, up by 66% from the previous 12 months. There are now more than 5,600 toon companies employing at least 200,000 people having produced 130,000-plus minutes (2,100-plus hours) of animation. Other locally made favorites include “The Story of Hongmao and Lantu” and “Calabash Boys.”