China’s top film regulator looks set to increase the number of foreign films allowed into the country on a revenue-sharing basis beginning in 2018.

China Film Bureau chief Zhang Hongsen has warned the country’s film industry to prepare for competition from more foreign films entering the market in 2018.

Zhang, a director at the powerful regulator, the State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT), said there would be more “intensive and fair” competition in 2018 because more foreign movies will be entering China’s film market.

Various officials have dropped hints in recent years that China’s quota system restricting foreign movie imports to 34 titles a year on a revenue-sharing basis will open up further in 2017-2018.

The current quota system was put in place in when China signed an agreement with the World Trade Organization in 2012, valid for five years. The second round of negotiations is likely to be held in February 2017.

Speaking at a forum at the 13th Changchun Film Festival on Friday, Zhang said the the industry was unlikely to reach its box office revenue target of RMB 50-60 billion (US$7.4-8.9 billion).

The national film authority head told the forum that this year’s summer box office revenue had barely grown and that revenue during the Mid-Autumn Festival decreased by 13.4 percent.

Zhang speculated that the decline in revenue might be related to the removal of ticket subsidies made by film producers. The practice, whereby moviegoers buy tickets at a discount and producers subsidize the remainder of the full price, has fallen out of favor after a series of box office fraud scandals.

The film czar told the forum that the country’s film industry had entered a stage of ‘fluctuation’ following last year’s peak. Zhang said the market was starting to weed out shoddy movies and profit-oriented investments.

Despite the drop in box office takings, Zhang pointed to the increasing amount of screens and theaters as an indication of the industry’s robustness.

The number of screens in the country has grown from 32,000 at the start of the year to approximately 37,817 screens now, with 1.12 billion moviegoers so far in 2016, compared to the 1.25 billion moviegoers last year, according to Zhang.

“China’s film is not at a turning point where it would decline, but heading toward a healthy, positive, and rational direction. We are confident to turn China into a film powerhouse.” Zhang said.

— Additional reporting by Wang Qingyuan.