In the world's No. 1 moviegoing city, Hollywood is no longer king.

In Hong Kong, a score of locally produced Cantonese-language films that cater to native tastes and humor have quietly but firmly pushed aside Hollywood's big-budget blockbusters at the box office."Ten years ago, two-thirds of box office returns went to imported movies, mainly Hollywood productions," said William Kong, a distributor of foreign films.

"But now, Western movies account for only 25 percent of the market. If the situation continues to deteriorate, it will be very difficult for us to stay in business."

Statistics compiled by Golden Harvest, a local film producer, show Hong Kong residents are the world's greatest moviegoers. On the average, they attend the movies once a month, compared with fewer than five times a year for Americans.

Hong Kong theaters last year took in $1.2 billion at the box office, and locally produced films accounted for 75 percent of that figure. Currently, only 15 out of 110 cinemas in Hong Kong now regularly show foreign movies.

Hong Kong now ranks third in the world in movie production, behind the United States and India. Last year 105 Hong Kong-made films were released, compared with about 300 U.S.-made films in the same period.

In addition, the quality of Hong Kong's movies has shown significant improvement over the old "fists and kicks" flicks.

"A Chinese Ghost Story," produced by the Film Workshop, won the Special Jury Prize and the Coup de Coeur in the Avoriaz Festival in France in January and was named best film at the Fantasporto Festival in Portugal the following month.

The movie is also featured in this year's New Director/New Films series at the Museum of Modern Art in New York.

All of this new respectability, however, probably owes a debt to those "fists and kicks" movies of the 1970s and to the late kung-fu star Bruce Lee, who helped bring attention to Hong Kong movies.

"It was Bruce Lee who made Hong Kong movies well-known to the world," said Russell Cawthorne of Golden Harvest. "Hong Kong has excelled in action movies since then."

Action movies still are popular all across Asia and remain a staple in Hong Kong's film industry. But local artists are also producing a wide variety of movies, led by a group of "new wave" directors who have been trained abroad.

These films have been steadily gaining in popularity and have made a noticeable dent in the box-office take of U.S.-made films.

"Rambo: First Blood Part II" was the top-grossing foreign movie shown in Hong Kong, pulling in $3.17 million over a 57-day period in 1985. In 1978, "Star Wars" brought in only $351,282 while "The Empire Strikes Back" in 1980 earned $735,897. "E.T." earned $2.15 million in 1983.

However, the locally produced "Eighth Happiness," a family comedy about three brothers finding love because of a breakdown in the phone system, grossed $4.7 million in February during the Chinese New Year, a key movie-going period similar to Christmas and the summer holiday in the United States.

"The problem with U.S. movies here is the style of storytelling," said Shukei, a film critic. "Hong Kong directors put many different elements together - laughter, sorrow, fighting and romance can all exist in one film.

"This style of storytelling fits neatly to the hurried nature of life in Hong Kong, making American movies boring to most people."

If Hong Kong is exotic to Americans, imagine what the United States, and American humor, must be like for Hong Kong residents, especially the large number of immigrants from China who do not speak English.

American humor is often based on wordplay and does not make sense to non-English speaking people, even in translation, which could be another reason for the growing interest in locally made films.

But the Hollywood magic still has a toehold in Hong Kong, and quality movies will always draw crowds.

"Hong Kong movies are better than many Hollywood Class B ones, but there is a very long way to go to beat Class A blockbusters," Shukei said.

The U.S. film industry has made some adjustments in its marketing strategy in Hong Kong, as a response to the growing interest in local productions.

Rather than flooding the market, Hollywood uses the practice of "going narrow" or releasing only those films likely to appeal to local moviegoers.

Also, Hong Kong does not yet have the technology to duplicate Hollywood's more lavish productions such as the "Star Wars" movies, so those U.S. films are likely to make money.

The massive publicity campaigns that accompany Academy Award-winning movies also usually mean profits, but not always. Audiences had to look quickly to see "Norma Rae," for which Sally Field won the best actress Oscar in 1979 It ran for all of three days in Hong Kong.