At Sydney Opera House, actor Jackie Chan joked around with a small audience of reporters, photographers and movie makers as he announced the start of filming for Bleeding Steel, which will be the largest budget Chinese production to ever shoot in Australia.

Chan appeared alongside Chinese cast members Nana Ouyang, Erica Xia-Hou and Australian actress Tess Haubrich in front of the packed Utzon Room.

The announcement is a huge coup for the New South Wales Government, which earlier this year, created the film fund Made in New South Wales, targeting opportunities for international and TV films to be made in the state.

"I love working here, any chance we come back here, because we know the crew, we know everybody here," Chan said.

"I know Australia really well, I stayed here for two years, mostly in Canberra, Sydney I know very well, and Melbourne... I'm just like a tour guide," he said, to laughter.

China's market is set to overtake the US as the biggest movie market as soon as next year, and Bleeding Steel is the largest budget Chinese production to ever shoot in Australia.

"Today I think is a great day for New South Wales because we are now moving into a significant professional era of bringing big time movies, big time reach into new markets," acting Premier Troy Grant told reporters at the conference.

"For him to bring remarkably talented young stars, work with our local screen industry is just such a coup and this is just a start for a lot of big things in New South Wales.

"This movie Bleeding Steel is a wonderful example of a new partnership with China, a new entrant into the market."

Chan was the world's second highest paid actor according to Forbes last year earning $81 million, only behind Robert Downey Jr.

China and Western partnerships

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The film comes at a time when more and more partnerships are being formed between Western studios and Chinese productions, as a rapidly growing middle class spurs booming demand for entertainment.

"The world has much to learn from China's creative talent, producers, marketers and distributors, and by the same token we strive to bring to our Chinese collaborators the types of storytelling expertise," said Ellen Eliasoph, the chief executive and president of Village Roadshow Pictures Asia.

"The growing partnership between the two countries' industries is really a match made in heaven."

Bleeding Steel, which is directed by Leo Zhang has begun filming in spots around Sydney including Broadway, follows a hardened special force agent who has to protect a young woman after she witnesses a "sinister conspiracy".

Chan also highlighted good scripts with stories that appeal to both China and Australian markets is key, while also delighting the crowd and revealing he would like to make a "love story" movie.

Australia, with its geographical proximity to China and Sydney with its famous landmarks have been in countless films, and will be featured again in Bleeding Steel in its opening shots.

"After being struck by floods in the Day After Tomorrow, smashed by monsters in Godzilla, and Pacific Rim and attacked by angry Magneto in X-Men: Apocalypse, I'm glad to see that the Sydney Opera House is still intact," joked the president of Heyi Pictures, Kailuo Liu, speaking via translator and SBS presenter Lee Lin Chin.