China’s $2B Blockbuster ‘Ne Zha 2’: One-off Hit or Beginning of a Box Office Recovery?

China’s record-smashing animated blockbuster Ne Zha 2 has brought a much-needed burst of enthusiasm to Beijing’s beleaguered film industry. An irreverent twist on Chinese mythology and a classic 16th-century novel, the sequel has earned $2.03 billion and smashed virtually every box office record that exists for an animated feature: It is the highest-grossing animated film of all time (overtaking Pixar’s Inside Out 2 at $1.7 billion) and the top-earning movie ever in a single market. Ne Zha 2‘s success also follows a bruising post-pandemic period for China’s film business. In 2024, annual ticket revenue in the country crashed 23 percent to $5.8 billion, the lowest total in a decade, leaving many in the industry worrying that the country’s youth may have deserted the cinema for good in favor of free forms of mobile entertainment. In the wake of the Ne Zha 2 phenomenon, much of China’s filmmaking community is now asking the same question: Can one monster hit reignite a country’s passion for moviegoing and restore animal spirits to the country’s once-booming film sector? 

“Ne Zha 2’s remarkable success highlights the creative potential of China’s film industry and proves that the Chinese audience has not abandoned interest in cinemagoing,” says Rance Pow, president of exhibition consultancy Artisan Gateway. “However, the shape and speed of China regaining its longer-term growth trajectory requires greater breadth and depth in popular film product.”

Pow points to several worrying signs of distortion in China’s theatrical results of late. Just as many North American analysts have grown concerned about the U.S. studio’s reliance on ever larger tentpoles, the Chinese landscape has become increasingly top-heavy — in the extreme. 

“Ne Zha 2’s box office total is currently greater than all other films theatrically released in China for 2025 combined,” Pow notes. “The Chinese New Year holiday in particular — very early in the year — has become crucial to full-year performance prospects. Local industry awareness of seasonality results in the highest prospect films crowding into a very brief Chinese New Year debut frame.” 

China’s only other significant hits of 2025, so far — Detective Chinatown 1900 ($484 million) and Creation of the Gods 2 ($169.3 million) — released side by side with Ne Zha 2 during the same one-week Chinese New Year launch window in late January. Hollywood’s biggest title in the country this year was Captain America 4, which has earned $14.4 million since its debut on Feb. 14 (compared to Captain America 3‘s $180 million China haul back in 2016, during the peak of the popularity of Marvel product in the country).

Other key trading periods that once sustained the market throughout the year — mid-summer, the National Day holiday in October and the year-end festive season in December — have slumped since the pandemic, Pow adds. 

“Both local and foreign films now face a similar challenge,” he says, “to rebuild audience interest in the best films available from a near standing start.”

Market participants also worry that China’s ongoing economic slowdown and the fast-changing media consumption habits of the nation’s youth present challenges to a full-bore recovery.

China’s leaders have set an ambitious economic growth target of 5 percent for 2025, but the country continues to grapple with the fallout of a real estate crisis, low consumer confidence, deflationary pressures and trade tensions with the U.S. The economic uncertainty has hit the young especially hard, with the urban jobless rate for 16- to 24-year-olds, excluding students, hovering around 16 percent. 

In October 2024, Beijing market research firm Fankink conducted a study among Gen Z consumers in Chinese cities across tiers to measure media consumption needs and habits. 

James Li, Fankink’s president, says one of the key findings was that the youth cohort felt uncertain about their future careers and financial situations. 

“When asked specifically about moviegoing, some young people explicitly indicated they go less often now because they don’t have enough money,” Li adds. “This reason was rarely cited in the past.”

The firm’s research has also found signs of a slide in filmgoing’s favorability as an entertainment option. 

“According to our tracker last November, ‘going to the theater to watch a movie’ was ranked as one of the lower frequency activities compared to other forms of entertainment content, such as short-form video, social media and games,” Li adds. “This means that Chinese moviegoers are not showing strong desire and urgency for theatrical attendance unless they are convinced that it is absolutely worth their time and money.”

The Chinese market hasn’t generated a significant hit since the Chinese New Year holiday ended in early February. Notable releases on the calendar include Disney’s Snow White on March 21 and Warners’ Minecraft on April 4, as well as Chinese tentpoles like New Life on March 22, Feng Xiaogang’s We Girls on April 4 and Da Peng’s The Litchi Road on July 25. 

Adds Li: “Ne Zha 2 was undoubtedly a huge success and should be considered a positive sign. But we will need to see one of these new releases become another hit before we can say with more certainty that recovery for the Chinese entertainment market is happening.”