Apparently animation companies receive lots of preferential treatment and subsidies which had unintended consequences, from HuXiu:

In 2011, China produced more than 260,000-minutes-long tv episodes of animation, which is 180,000 minutes more than Japan, the second biggest animation-output country of the world. In 2012, a total of 117-thousand-hours-long animation was aired in China.

[…]

As a result, fake companies and fake projects arise in the animation industry, taking advantage of the favorable policies by enjoying the generous subsidies while contribute nothing. More than 30 animation festivals were planned in eight months, and more than 20 cities claim they are working on becoming “the City of Animation (动漫之都)”.