In an open letter, director Xie Fei has urged censors in China to issue clearer rules on banned topics.
Xie, 70, won international awards for films such as Black Snow (1990) and Woman Sesame Oil Maker (1993), which was awarded the top prize at the Berlin film festival.
In a letter addressed to the state film bureau, he cited recent difficulties in getting film approvals by numerous prominent directors including Jiang Wen, Tian Zhuangzhuang, and Jia Zhangke.
"The state administrative methods and the censorship system that manages the film industry long ago lost its real social, economic, ideological and cultural significance," Xie wrote in the letter, which was posted on his microblog page on Saturday.
It "has only become a corrupt black spot for controlling the prosperity of the cultural and entertainment industry, killing artistic exploration and wasting administrative resources," he wrote.
Controls on the kinds of films Chinese directors can make were also leading to poor box office showings, he said, with Chinese viewers largely favouring foreign films produced by film makers without such restraints.
Xie is an outspoken critic of China's censorship system and in recent years has refused to make new films because of it.
He said China's film censorship should be based on laws and regulations that are linked to the constitutionally guaranteed right to free speech and the right to publish.
"We must recognise that the best way to administer the cultural industry is through law and through the market," the letter said.
"Today's film censorship system is not 'ruled by law,' but still ruled by a system based on personalities that we long ago said should end."
China's censors were still banning anything they consider to be a negative portrayal of the nation, he said.