Opening up the Chinese film market to more Hollywood movies has cost domestic pics a big chunk of market share, a senior Sino official has warned, adding that local shingles must work harder to produce better movies.

“The dominance of domestic films in the Chinese film market has been shaken … this has brought handsome profits to the American film industry,” Tian Jin, deputy minister at the State Administration of Radio, Film and Television, told a news conference on Chinese culture at the 18th Communist Party Congress. “But at the same time, it has also posed pressure and challenge to the Chinese film industry.”

The Congress’ dealings went behind closed doors at the weekend as the delegates engaged in horse-trading about how to divide up the power in China.

Tian repeated statistics showing that local B.O. reached $2.1 billion at the end of October, up more than 40% and more than all of last year, Tian said, while the domestic share had fallen to 41% from around 60% due to the rise in imports.

Under pressure from Hollywood and the World Trade Organization, China signed a Memorandum of Understanding in February to raise the number of imported movies from 20 to around 34, including 3D and Imax movies, and up the share of profits given to overseas studios to 25% from 13%.

The initiative came from Xi Jinping, who is expected to be named leader at the Congress.

Speaking about the MoU at the weekend, Tian said it showed China’s commitment to uphold reform, adding, “There is an open and smooth channel for foreign films to enter the Chinese market.”

He said domestic films were facing great pressure and the biz needed to be more competitive.

“Following the principles set out at the 18th National Congress, we will work to enhance the creativity and impetus of film production. We will also aim to produce films that are excellent both intellectually and artistically,” said Tian.