'Phenomenal talent' Xiaolu Guo. Photograph: Eamonn McCabe

We all know that commercial constraints can limit what artists produce, but is it accurate to call this a form of censorship? Chinese polymath Xiaolu Guo thinks so, and she explained why in a fascinating talk at Bristol's Festival of Ideas last week, in which she also presented her new film, How Is Your Fish Today?

Xiaolu is a phenomenal talent. She has already published five books in China in addition to the two published here, the most recent of which - A Concise Chinese-English Dictionary for Lovers - was widely seen as the unofficial runner-up in the recently announced Orange Broadband Prize for Fiction. She also writes poetry, and How Is Your Fish Today? is her first feature film, following her documentary The Concrete Revolution, a couple of shorts and numerous screenwriting credits. Not bad for a 34-year-old.

Talk of "commercial censorship" can easily sound like sour grapes when it comes from artists who are basically peeved that no one will pay them enough to do what they really want to do. But when the phrase is used very deliberately by an exceptional wordsmith who grew up in communist China, where political censorship is all too real, you have to sit up and take notice.

So what did she mean by the term? To use a concrete example, it is when "a big producer gives you money but you have to make a film in his way."

How Is Your Fish Today? was made for £20,000 and Xiaolu shot it exactly the way she wanted it. However, the film has no UK distributor and so is currently only being shown on the festival circuit, where it has already picked up top prize in the International Women's Film Festival at Créteil, Paris. Your next chance to see it will probably be when it screens on Channel 4 and More4 in the autumn, unless you're in Melbourne for its film festival in July. In contrast, she told the Bristol audience, "I'm going to make another film later this year with more money, more commercial. Let's see if its better - I don't think so."

Although it's easy to see how a certain amount of artistic control can be sacrificed when you work with bigger budgets, it doesn't sound too much like censorship until you realize what exactly commercial considerations mean you can and can't do. Xiaolu talked about one unpleasant personal experience, the details of which she asked any journalist present not to repeat. Suffice it to say it was an example of a general problem that some issues and topics are judged to be too sensitive to voice in certain countries. It's not that the authorities won't let you talk about them, it's just that distribution channels shy away from the wrong kind of controversial.

Although my first reaction was to think "censorship" was entirely the wrong word here, there is something insidious about this kind of intellectual filtering which can be as pernicious as overt prohibition. But what's most disturbing about it is that, ultimately, it's democratic. In a free market, no one will not produce, screen or publish anything that people are willing to pay for.

What Xialou called commercial censorship is hence indirectly nothing more than the expression of the will of the majority of the people. Whereas political censorship is top-down, commercial censorship is really bottom-up. It's self-censorship of what society doesn't want to hear.

· Xialou will be talking much more about this at the South Bank Centre on 7 July. Go if you can: writers and artists can be very dull speakers but this woman crackles with intelligence and creative energy.