China's State Administration of Radio, Film and Television (SARFT) hasblocked distibution of Lost In Beijing in cinemas or online, and banned producer Fang Li and his Laurel Films from making movies for two years.

It has also suspended the film's screening permission and confiscated print and promotion material following an alleged breach of Chinese film regulations.

The news came as a shock for Fang and the film's director Li Yu as the film-makers were just celebrating the film's box office gross reaching $2.5m,whichmakes itone of the best-performing small-budget films in 2007.

According to the SARFT announcement, the producers had three major 'violations' of Chinese film regulation.

First, the producers were accused of spreading the unapproved version of the film and pornographic clips of the film on the internet and also producing the unapproved film into audiovideo products.

They were also said to have screened the uncut versionat the Berlin Film Festival in Feb 2007. Lastly, Fang and the distributor of the film Polybona were accused of promoting the film in an 'unhealthy and indecent' way during the film's theatrical and internet release.

Apart from the above mentioned punishment, SARFT is also requesting to ban the audiovideo products of the film. Currently the Ministry of Culture is China's regulator of audiovideo products.

Polybona Film Distribution and another investor of the film, Beijing Zhonghong Real Estate Development Group, as well as actors of the film were also seriously criticisedin the announcement and were requested to makeimprovements.

Responding to the ban, Fang said he would be appealing against the decision because he was also the victim. He said one of the unprocessed, unedited images was stolen and distributed on the internet, and he would discuss with the Film Bureau officials on Monday.

Starring Fan Bingbing, Tony Leung Ka-fai and Tong Dawei, Lost tells the story of a young masseuse and her entangled relationship with her boss and her husband. The film struggled to pass censorship after major cuts in February before joining the Berlinale.

The banning of Lost In Beijing is the first punishment caseconcerning film in 2008, after SARFT announced last week (Dec 29),that it isprohibiting production and distribution of pornographic films. According to the notice, contentsfeaturing rape and graphic sex, as well as unapproved second versions of film or TV dramas are banned from showing in cinemas or on TV channels, the internet oron DVD.

On the same day of the ban, industry players have been calling to set up the film rating system to avoid filmmakers being punished for their artistic expression.

Zhao Jun from Guangdong Province Film Corporation said the ban might affect films like Lust, Cautionfrom being released in China. Film critic Wei Yingjie believed the rating system could solve the so-called pornography problem as 'the line between pornography and art is difficult to draw'. 'People won't need to go to Hong Kong to see a full versioned Lust, Caution if there is a film rating system,' he said.

Lost in Beijing controversy timetable:

Feb 5, 2007

Lost In Beijing gains theapproval of the censors after cutting 15 minutes and a major storyline.

Feb 16, 2007

Lost In Beijing premieredat theBerlin Film Festival with the uncensored version. Producer Fang Li explained that there was not enough time to produce an edited version with English subtitles.

April 24, 2007

The China release date of the film was put on hold until May 11 to allegedly punish the producer for showing the full version of the film.

May 11, 2007

The release date was put off again amid rumors that the authority was still unhappy with the film and had decided to downplay the film.

Nov 26, 2007

Release inChina on 150 prints.

Dec 31, 2007

Lost In Beijing gains box office revenue of around $2.5m (RMB 18m) after six weeks, becoming one of the best-performing small-budget films in 2007.

Jan 3, 2008

China's SARFT decided to suspend the film's screening permission and banned the film from internet and DVD releases. The film's producer and director were banned from making movies for two years.