This study is the first empirical research on understanding the determinants of the concentration of cultural industries (CIs) in cities in China. What factors of the urban environment are important for attracting the location of CIs? How is the development of CIs in a city influenced by its neighbouring cities and its early development? To answer these questions, three types of spatial panel models – the spatial lag model, the spatial error model and the spatial dynamic panel model – are employed using the urban statistics for China from 2003 to 2009. Human capital, diversified industrial structure and transportation and communication infrastructure are significant factors contributing to the development of CIs. The empirical findings reveal the presence of positive spatial spillovers among cities, which suggests that promoting CIs in one city benefits other cities. Also, the evidence suggests the presence of temporal spillovers, implying that the early concentration of CIs in a city tends to attract more CIs in that city.