DreamWorks Animation SKG Inc (DWA.O) and its Chinese joint venture partners will open a theme park in Shanghai by 2016, with a total investment amount of 20 billion yuan ($3.14 billion), the companies said on Tuesday.

The creator of "Shrek," together with its joint venture partners -- ChinaMedia Capital, Shanghai Media Group and Shanghai Alliance Investment Ltd -- will also cooperate to produce "Kung Fu Panda 3" in 2016, the joint venture said in a statement.

"Without question, China has what is needed to make great animation film ... this is a perfect fit for us at DreamWorks," Jeffrey Katzenberg, CEO of DreamWorks, told a news conference.

A sharp rise in China's box office revenues, backed by a moneyed middle-class willing to pay top prices for a trip to the cinema, is luring Hollywood to one of its largest untapped markets.

Walt Disney Co (DIS.N) broke ground on its planned Shanghai Disneyland last year. Its Shanghai theme park is estimated to cost 24.5 billion yuan, with hotels and additional facilities costing another 4.5 billion yuan.

In May, News Corp (NWSA.O) agreed to buy a stake in Chinese movie distributor Bona Film Group Ltd (BONA.O).

DreamWorks' theme park, Dream Centre, will be located in the Xuhui district of Shanghai, said Li Ruigang, Chairman of China Media Capital said, adding he hoped it would become China's Broadway or West End.

DreamWorks announced in February it will create a China JV called Oriental Dreamworks that will develop and produce Chinese animated and live-action content for distribution within China and around the globe.

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