Box office revenues -- growing by leaps and bounds in China thanks to its fast-growing middle class -- have whet Hollywood's appetite despite complaints over government restrictions on access to screens, content control and piracy.

CPG China Division, the new arm of Cameron Pace Group, will offer Chinese film makers three-dimensional camera technology but will not be involved immediately in producing films, Cameron told Reuters in an interview.

"We're not going to tell Chinese film makers how to make movies. We are going to help them make a transition to 3D production technology as cost effectively as possible, and in a way that doesn't inhibit creativity," he said.

Three-dimensional films, which enhance depth perception by being shot from two perspectives, gained in popularity during the 2000s and achieved a breakthrough with Cameron's 2009 blockbuster "Avatar", a movie about blue aliens which set a $2.8 billion box office global earnings record.

Cameron also directed the second-highest grossing film of all time, the nautical disaster-romance starring Leonardo DiCaprio and Kate Winslet, "Titanic".

Cameron said the deal was "huge", though he would not give details on the amount of the investment or the venture's equity split with two state-owned entities -- film distributor Tianjin North Film Group and Tianjin Hi-tech Holding Group.

"This is a huge investment for us, as much in sweat equity ... as it is financially," he said, noting that initial projects to "build muscle" will focus on 3-D films highlighting Chinese cities.

The Cameron Pace Group, formed 12 years ago with camera guru Vince Pace, earned $58 million last year renting its 3-D cameras to crews producing films, concert videos and sports broadcasts.

A die-hard proponent of expanding 3-D viewership, Cameron said the ambitions of the Chinese partners, as well as Chinese state television eager to try out live 3-D broadcast technology, exceeded even his own.

"We think we're on the verge of a kind of media revolution. And we certainly have the enabling technology, we have the methodology, we've honed our skills."

COPYCAT CONCERNS

The director's move follows a string of other high-profile Hollywood announcements in China.

The next "Iron Man" film will be co-produced in China under a joint agreement between Walt Disney Co, Marvel Studios and DMG Entertainment.

"Shrek" and "Kung Fu Panda" creator DreamWorks Animation SKG Inc plans to open a 20 billion yuan ($3.14 billion) theme park in Shanghai by 2016 with Chinese partners.

U.S. film producers were excited about a deal hammered out during Vice President Xi Jinping's February visit to the United States that paved the way for the import of 14 premium format films, such as IMAX or 3-D.

If the deal is implemented, those films will be exempt from China's annual import quota of 20 foreign films per year, a concession offered by Beijing after losing a World Trade Organization dispute over media distribution in 2009.

Technology transfers have been a stumbling block for other foreign invested joint ventures in China, as companies have complained that handing over intellectual property is sometimes the price of admission to access China's huge consumer market.

CPG China Division will rely heavily on cutting edge cameras, but the director downplayed copycat concerns.

"That's certainly a danger. We are going to look very carefully at how we protect our core technology. But frankly ... it is changing so rapidly that you can clone what we are putting in the field now, but we'll be coming out with something new in 18 months, anyway," he said.

(Editing by Jeremy Laurence)

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