Film Director James Cameron speaks during a press conference of their new 3D movie "Avatar" in Beijing, Wednesday, Dec. 23, 2009. James Cameron says China's film industry stands to gain a lot if the country opened its doors to foreign films, after the World Trade Organization upheld a ruling this week that China was illegally restricting imports of movies and other media. (THE ASSOCIATED PRESS/Andy Wong)

BEIJING - Hollywood director James Cameron urged China to open its doors to more foreign films, arguing it would boost the local cinema industry after the WTO ruled Beijing was illegally restricting movie and other media imports.

In Beijing to promote his latest sci-fi extravaganza, "Avatar," Cameron said Wednesday that China's breakneck economic growth meant it no longer needed measures to protect its film industry.

"China's economy is expanding very, very rapidly. And I think the feeling right now is that perhaps it doesn't need to be protecting itself quite as much," Cameron, the director of blockbusters that include "Terminator 2: Judgment Day" and "Titanic," told reporters. "Chinese filmmakers are very strong ... they're highly respected."

The Chinese government protects local films by limiting the number of film imports on a revenue-sharing basis to 20 a year, a quota that effectively limits Hollywood blockbusters to 20 slots annually.

These and other restrictions have been a key complaint by Western countries, who say that China's rapid rise as a trade power has been in part aided by unfair policies that boost sales of Chinese goods abroad while limiting imports into its market.

"I think that by opening the doors in China to other filmmakers, it will raise the entire film industry in China," Cameron said. "It will get people more excited, there will be more seats, more cinemas, more excitement about the cinema-going experience, which will also raise the Chinese filmmakers' ability to play their films."

On Monday, a World Trade Organization panel upheld a ruling in a case brought by the U.S. government that China was obstructing trade by forcing foreign suppliers to distribute movies, music and books through state-owned companies.

China expressed disappointment at the decision but gave no immediate sign whether it could keep trying to defend the controls.

The WTO case focused on complaints by groups representing music labels such as EMI and Sony Music Entertainment, publishers including McGraw Hill and Simon & Schuster and Hollywood studios Warner Bros., Disney, Paramount, Universal and 20th Century Fox. The groups say the Chinese rules cost them tens of millions of dollars each year in lost business opportunities.

China's box office is booming, but still comparatively small compared to the U.S. market. Government statistics show that revenues surged from 920 million yuan in 2003 to 4.3 billion yuan (US $630 million) in 2008 - compared to $9.8 billion in the U.S. last year.

"Avatar" is a special-effects heavy space fantasy starring Sam Worthington and Zoe Saldana that combines an inter-species love story with human-alien conflict over natural resources on a distant planet in the 22nd century. The film opens in Chinese cinemas in 2-D and 3-D in January.