Zhang Yimou, the maker of "Raise the Red Lantern" and "Red Sorghum", is being investigated by family planning officials in the eastern city of Wuxi, the website of the People's Daily newspaper reported.
He has "at least seven children and faces a 160 million yuan fine", the website of the Communist Party mouthpiece said. Penalties for breaching the policy are calculated according to a violator's income and the number of children involved.
The state-run Global Times newspaper quoted "online posts" as saying he had "relationships with several women", but it was unclear in the People's Daily report where the children were born.
China has implemented a strict one-child policy for many urban residents for over 30 years, although there have been recent suggestions that the policy may be loosened.
Zhang directed some of China's most successful modern martial arts films, including "Hero" and "House of Flying Daggers".
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