China’s box office was off to a roaring start during the crucial Lunar New Year holiday while the majority of cinemas remain closed in North America, underscoring the diverging fates of the world’s two largest film markets.

By 7pm on Friday in Beijing, China’s box office had already made Rmb1.7bn ($260m) in sales, according to booking service Maoyan, with 10 major homegrown films set for release during the holiday period.

The pandemic has brought a striking divergence between Hollywood, the long-running entertainment capital of the world, and China, which toppled the US last year as the biggest moneymaker in box-office sales.

While cinemas in the US and Europe remain largely empty as the pandemic drags on, China’s box office has recovered sharply as movie attendance has returned to nearly normal levels.

During the National day holiday, despite cinemas remaining limited to three-quarters seating capacity, ticket sales reached Rmb3.9bn, the second highest taking ever.

Hollywood executives and analysts fear the trend could persist even after the pandemic, as the US entertainment business moves towards online streaming. Warner Bros is releasing all of its films this year on its HBO Max streaming service alongside cinemas.

“It looks like more and more, [the US box office] will be a supplemental income to streaming,” said Jeff Bock, longtime box office analyst for Exhibitor Relations. “[The US] may never have a weekend again that even touches on what Chinese new year does this year,” he warned.

2020 also marked another milestone for China’s film industry: the first time that all of the country’s top 10 grossing films were made by Chinese studios.

Over the past decade, Hollywood blockbusters have gone from dominating China’s box office top 10 to having to fight for a spot alongside local productions. According to China’s national film industry development special fund management commission, imported films accounted for under 16 per cent of the total box office in 2020, down from 36 per cent in 2019.

Ticket presales for Lunar New Year, a peak period for Chinese theatrical releases, were dominated by titles from Chinese studies.

Detective Chinatown 3, the latest instalment in a popular slapstick comedy franchise by Wanda Pictures, is expected to top holiday rankings. It had bookings of more than Rmb1bn ($155m) by Friday evening, according to Maoyan.

Part of this dynamic is explained by the pandemic, which prompted US studios to postpone most of their blockbusters to later this year or 2022.

And Hollywood has always faced state-imposed limits on its ability to reach and profit from Chinese audiences. Beijing’s film industry regulator maintains a quota of 34 imported films per year, and importers only get to keep 25 per cent of box office revenues — remaining income goes to state-owned China Film Group or Huaxia Film.

But these factors alone cannot explain the strength of Chinese-directed features in recent years.

China’s studios have learned to match Hollywood with slick production, special effects and celebrity and franchise branding, while also becoming adept at tapping into national sentiment as a way to spur sales, a trend encouraged by the Chinese Communist party.

“The local [Chinese] market spent 10 years inviting Hollywood to come show them the ropes. Now the local market has matured,” said a senior entertainment lawyer who works with the major studios. “It’s not easy to get films into the [Chinese] market, and even when you do, the revenues of fractions of what they used to be”.

Mulan, Disney’s live-action remake of the 1998 animated film, was met by nationalist backlash in China, as pirated versions of the film surfaced on social media ahead of the official release. The film went on to make only $40m in China.

Wonder Woman: 1984, the sequel to the hit film starring Gal Gadot, made $25m in China, less than a third of the $90m its 2017 predecessor brought in. However Disney’s Soul, a recent Pixar film, has performed relatively well, earning $56m in sales in China.

The surprise success of The Eight Hundred, which in 2020 brought in $450m to become China’s first top ranking global box office hit, underscored the subtle line Chinese studios have learned to walk in search of success.

The wartime epic set in Shanghai during the 1937 Japanese invasion was originally delayed by a year because of its depiction of troops from the Nationalist Kuomintang army, which fought the Communist party during China’s civil war.

But after changes required by the regulator, the film, which was released just as Chinese cinemas were reopening from months of lockdown, not only touched a nerve among audiences with its tale of Chinese soldiers banding together against overwhelming odds — it was also embraced by state media as “patriotic” and shown at Communist party screenings.

“Cinema-goers have a soft spot for movies that are made by their own country’s filmmakers,” said David Chen, director of production at Versatile Media, a Hangzhou-based studio. “It is inevitable that they will gravitate to those films”.

Additional reporting by Emma Zhou in Beijing