FREE ACCESS: Visitors appreciate paintings celebrating the 100th anniversary of the 1911 Revolution at the National Art Museum of China. The museum, like most museums and art galleries in China, are offering free access to the public now (XINHUA)

This reform was initially interpreted as dropping the financial burden of cultural institutions from the central budget, and it was not until recently that many began to perceive the goal and benefits of the reform.

The Central Government recently decided that Kunqu opera theaters can still receive public funds as non-profit cultural institutions. But Ke Jun, President of Jiangsu Provincial Kunqu Opera Theater, has already seen the benefits of the reform and said no to that option.

Like many other theaters before the reform, winning prizes was the ultimate goal of creation in the Kunqu opera theater. It was not only because Kunqu's audience, who is largely the cultural elite, is shrinking, but also because the theater failed to keep up with changes in the market. But operators of the theater had to tailor works to the market in order to attract larger audiences after it was required to reform in January 2005. They introduced a number of mainstream and fashionable works from the classical repertoire, and produced seven versions of Peach Blossom Fan 1699 for audiences of varied ages.

"The theater staged 644 shows in 2010, five times more than that before the overhaul, which yielded 6.07 million yuan ($948,440), 10 times that before the reform, and brought a 10-fold increase in performers' annual salaries," said Ke.

"We could have been stuck in a dead end if we hadn't carried out the reform," said Zhu Changyao, General Manager of Jiangsu Performing Arts Group, parent company of the Kunqu theater. "The group reaped a revenue of 125 million yuan ($19.5 million) last year, which has dispersed misgivings over the group's future."

"We are going to restructure the group into a shareholding company and invite new strategic investors, just as a true market player does," Zhu said.

By the end of June this year, 590 theaters and troupes nationwide had completed the transformation, 27.8 percent of the total. The percentage with publishing houses and movie studios respectively reached 95.9 percent and 90.3 percent.

While China became the world's third largest movie producer with 526 feature films and box office revenue of more than 10 billion yuan ($1.56 billion) last year, publishing houses nationwide yielded 1.3 trillion yuan ($203 billion), topped the world in terms of overall variety, the number of books published, as well as circulation of daily newspapers.

Next priority

China's per-capita GDP exceeded $4,000 (25,511 yuan) last year, indicating the country is well poised to turn the cultural sector into a new growth engine through further reform efforts, said Zhang.

"Priorities of the reform in the next five years will be encouraging private investments in the sector, in addition to promoting mergers and acquisitions between existing cultural enterprises for operational efficiency," said Zhang. "It's because the goal of the reform is not only making cultural enterprises larger, but also encouraging them to build expertise and produce signature products through innovation."

Private companies contributed more than half of the cultural sector's value added, and two thirds of the jobs in the sector last year. And 90.8 percent of the 357,000 publishing businesses were private. The movie studio, Huayi Brothers, was listed at the ChiNext Board on the Shenzhen Stock Exchange in 2009, marking a milestone in the development of China's cultural sector.

Following Huayi Brothers, a number of restructured cultural enterprises completed initial public offerings in domestic and overseas capital markets. By February this year, 26 cultural enterprises had been listed on the A-share and H-share markets.