China hasbecome the third largest film producer in the world following the United Statesand India, one of China's top film industry officials claimed onSaturday.

China shot a record number 212 films in 2004, and cinemasnationwide reported a total box office income of $180m (Y1.5bn) said ZhangPimin, vice director of the film bureau of State Administration of Radio, Filmand Television. His comments were reported by the Xinhua news agency.

"But problems still exist in China's filmindustry," he said. " We have very few good films, for example."

According to Zhang, only three of the 212 Chinese moviesproduced in 2004 were really successful in terms of box office income, namely,The House of Flying Daggers, KungFu Hustle and A World WithoutThieves. These three blockbusters took upnearly 60 percent of the country's total box office revenue for that year, hesaid.

Zhangsaid China also needs to build more cinemas to entertain the growing number ofmoviegoers. "China's 1.3 billion people share only 1,200 cinemas, or 2,500screens. The United States, however, has 36,000 screens for its 200 millionpeople."

That means the world's most populous nation needs also torenovate some old, single-hall movie theaters into multi-hall complexes toscreen more films and accommodate larger audiences, he said.

"Modern cinema complexes built in Beijing and Shanghaiin recent years are all making good profits," said Zhang. Nationwide,multi-hall cinema complexes take up 80 percent of the country's total boxoffice income, he added.

Hiscomments come as Western exhibitors are beginning to make inroads into theChinese market. Warner's China division recently signed an agreement with thestate-owned Shenzhen International Trust Investment Corp. to open eight newcinemas in China this year in Shenzhen, Nanchang, Changsha, Zhengzhou andChongqing.