Hou Hsiao-Hsien has been one of the central members of Taiwan New Cinema (TNC) since the early 1980s and subsequently took on the rising trajectory of becoming an internationally famous film master. In contrast, during the same period, the Taiwan film industry diminished dramatically and nearly collapsed. Based on Pierre Bourdieu's theory of cultural production and the thesis of political economy of communication, this article regards Hou as a social agent and accordingly analyzes the dynamic interactions between him and the structural factors related to the broader transformations of Taiwan film industry. Hou seemed to choose his filming and production mode subjectively from the beginning, but actually the possibilities he got at the time were limited by the social structures. In addition, his rising trajectory also has been embedded in the dynamic processes of global cultural economy. Paradoxically, by the same local and global processes, Taiwan film industry has been seriously declining.