Chinese director Gao Qunshu said the agreement would bring more challenges for China's filmmakers, but in the long term he believed in the power of competition in an open market. "With 14 more foreign films, the market space for local productions will further shrink," he said. "There will be pressure, but taking the changes as a motivation to make better films is the only way out. More 'lame' works will be driven out of the market."

Qin Hong, chairman of Stellar Group, a leading privately owned film company, called for the government to crack down harder on piracy to protect local films against fiercer competition. "Most local productions win over audiences by plotlines, not grand scenes - we are so far unable to create another Mission: Impossible 4," he said.

The agreement grew out of a case challenging China's restrictions on the import and distribution of cultural products, which was won by the US at the WTO.

It will be reviewed in five years to see if it has functioned as envisioned, according to Reuters.

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