SHANGHAI (REUTERS) - China will take action to curb tax evasion and control "unreasonable" rates of pay in the film industry, the official Xinhua news agency said late on Wednesday (June 27), citing a notice issued by China's film and tax regulators.

It said illegal payment practices, including the drawing up of fake contracts in order to falsify income declarations, were driving up production costs, undermining overall product quality and damaging China's film industry, now worth US$8.6 billion (S$11.7 billion).

New standards needed to be formulated to cap payments granted to actors, with salaries not permitted to exceed 40 per cent of total production costs, it said. Payments to stars should amount to no more than 70 per cent of total wage costs.

The document also said measures needed to be taken to rectify the "blind chasing of stars" among Chinese youth, curb the "growing tendency towards money worship" and prevent "the distortion of social values".

It said "social benefits" should be the biggest priority, and the one-sided pursuit of box office returns, ratings or online clicks should be "firmly opposed".

China said earlier this month that it would launch investigations into tax evasion in the country's film and television industry after a series of famous names were accused of signing fake contracts.