[SHANGHAI] China's film regulator has suspended the distribution license of a company accused of fraudulently boosting box office figures for the martial arts movie Ip Man 3 by millions of dollars, the official Xinhua news agency reported.

Claims that the film drew more than 500 million yuan (S$105 million) at the box office in its first four days raised questions that prompted distributor Beijing Max Screen to admit it bought 56 million yuan of tickets itself, Xinhua quoted the State Administration of Press, Publication, Radio, Film and Television (SARFT) as saying.

The company also fabricated more than 7,600 screenings that it claimed generated 32 million yuan in ticket sales, Xinhua said in a report over the weekend.

Max Screen, in a statement, said it had "studied and fully accepted" the punishment, according to Xinhua.

The distributor could not be immediately reached for comment.

The case casts doubt over the stellar growth figures of China's box office receipts in recent years.

While the North American market, still the world's largest, has seen box office growth slow, ticket sales in China rose to around 44 billion yuan last year, up nearly 50 per cent from 2014, Xinhua said in an earlier report.

In February, monthly ticket sales in China exceeded those in the United States for the first time, propelled by local hit The Mermaid and the week-long Lunar New Year holiday.

The film bureau at SARFT said it ordered Beijing Max Screen to suspend distribution for one month while the firm "rectifies all malpractices", and issued warnings to three electronic ticket-selling groups involved in the fraud, as well as 73 cinemas, Xinhua reported.

"These kinds of issues could be considered inevitable in a young industry, but box office fraud has become so serious that it is already harming Chinese cinema," Zhang Hongsen, head of the film bureau, was quoted as saying. "Filmmaking and screening are two wings of one bird and they have to rely on each other. Only a regulated and healthy market can give birth to quality films," he said.

Xinhua said the Chinese film industry has been "blighted" by cinemas and distributors cheating to inflate box office figures through accounting ploys or other tricks, such as claiming ticket sales that exceed an auditorium's capacity.

REUTERS