Two other smaller theaters in the Yili Kazakh autonomous prefecture, Xinjiang, that have the same investor as Yao's cinema, implemented the system in July.
Yao says the cinema organized a rating panel formed by seven staff members, and confesses it is not professional enough because they lack expertise in child psychology.
The cinema staff will inform the parents which movies are restricted, and tickets that have already been purchased for young children will be refunded. He claims their poll showed 95 percent of people visiting the cinema supported the move.
"We don't want to make our system too complicated by introducing other ratings like PG-17. That would be difficult for privately owned cinemas like ours."
Yao says box office revenues will be slightly influenced by the new rating system, but he remains optimistic that it will continue.
There has been no official response from the country's film authorities. However, the cinema cites an anonymous source from "an upper-level administrator" claiming that the new rating system helps educate people, but could also affect the interests of movie production companies.
The establishment of a national film rating system has been called for since the early 2000s. It is always a hot topic at the annual Chinese People's Political Consultative Conference in Beijing. However, the matter has not been resolved.
The new rating trial has received a mixed response.
"The rating should be used to ease the restriction (on movies) and allow adults and children to select the film most suitable for them," Luo Jin, a Nanjing-based film critic, better known by his pseudonym "Magasa", wrote on his micro blog.
"However, until film censorship is abolished, this rating can only function as reference, and will therefore have no significance in changing the macro environment of movie production."