During the 1940s, puppet troupes of a new type were set up in Beijing, Tianjin, Shanghai, and other large cities and their influence continued to grow, laying a good foundation for the development of puppetry in the People's Republic of China. However, traditional puppet shows were still performed in other parts of China, particularly in the vast countryside.
In the 1950s, private puppet troupes were reorganized and became government funded. Nationwide and local puppet show festivals were organized from time to time, which greatly raised the social status of puppetry and its artistic level.
In April 1955, the First National Puppet Show and Shadow Play Festival was held in Beijing. Participants included troupes from 12 provinces and municipalities. Although the items performed were mostly traditional, they had been revised with the addition of new content. In addition, new works reflecting real life were created.
The festival also featured a large exhibition of valuable wooden puppets of which puppets carved by Jiang Jiazou, a master from Quanzhou of Fujian Province, regarded as national treasures. During this period, Chinese puppet troupes were sent to perform abroad and a puppet film industry began to take shape
In January 1960, the Second National Puppet Show and Shadow Play Festival was held in Beijing. New creations such as Monkey King Makes Havoc in Heaven, The Cowboy and the Village Girl, The Dauntless Boy, and The Fisherman's Song at Sea were produced at the festival. They were varied in theme and form. By then, puppet performances in China had come from the street to modern theaters and puppetry had become a fully respectable stage art.
In December 1975, the Third National Puppet Show and Shadow Play Festival was held in Beijing. It featured puppet shows with modern themes and also showed that bold attempts had been made to improve the modeling of characters, sound effects, and stage art.