The massive one billion US dollars film-funding deal between China-based Huahua Media and Hollywood’s Paramount Pictures has been terminated.

This ends half a year of uncertainty after reports first emerged that the tie-up had run into trouble due to Beijing's tightening of rules regarding overseas investments.

Under the original deal announced in January, Huahua and Shanghai Film Group (SFG) had agreed to provide one billion US dollars to finance 25 percent of Paramount’s films in 2017, 2018 and 2019. The deal was the latest in a growing string of similar-sized tie-ups between China and Hollywood, as both sides looked for ways to tap a booming Chinese box office on track to become the world’s largest within the next decade. 

But the deal had been rumored for months to have run into obstacles with Chinese authorities.

“Paramount Pictures and Huahua Media have mutually agreed to end their slate financing agreement... following recent changes to Chinese foreign investment policies,” Paramount said in a statement on Tuesday.

China has stepped up scrutiny of what it sees as “irrational overseas spending," especially in sectors such as entertainment, sports, and real estate.

The announcement said while new acquisitions and investments are now out, agreements and relationships established before the government’s new enforcement are still valid.

Huahua Media could not be reached for comment.

Earlier this year, Chinese conglomerate Dalian Wanda had to scrap a deal to buy American entertainment production company Dick Clark Productions Inc for one billion.

And in June, China’s banking regulators ordered a group of lenders to assess their exposure to offshore acquisitions by a handful of companies that have been on an overseas buying spree, including HNA Group, Dalian Wanda Group Co, Anbang Insurance Group and Fosun International Ltd.

Huahua has partnered with Paramount on several films, including “Transformers: the Age of Extinction” and “Star Trek Beyond." Shanghai Film Group was an investor in “Jack Reacher: Never Go Back.”

It is not clear if SFG is still involved in the deal. Paramount made no reference to SFG in its statement on Tuesday. Calls and text messages to SFG did not elicit any response.

Despite the changing dynamics of the China-Hollywood relationship, a record number of Chinese executives were in attendance at last week's American Film Market in California. 

Chairman and CEO of East West Bank, a major player in most of the China-Hollywood transactions over the past five years, Dominic Ng insists that the China Hollywood relationship is still a highly viable option.

"While China has become more careful about capital outflows, it is more eager than ever to attract foreign investment," he told CGTN Digital. "Several US entertainment companies have shown that local operations in China can pay off if done smartly."

(with inputs from wires)