Yuan's filmmaking debut, the innovative musical comedy Scenes of City Life (1935) (Dushi fengguang),[1]: 46  was one of the earliest non-silent features made in China, as the Shanghai industry was finally transitioning to sound.

The film's blend of screwball humor and romance reflected Yuan's harsh, documentary style social observations of middle class existence in the failing economy in Great Depression-era Shanghai.

An experimental blend of comedy and tragedy, Yuan's story followed a group of young friends whose lack of financial means and social status frustrated their dreams of happiness, including a girl singer, her prostitute sister, and her soldier lover, home briefly between fighting the Japanese occupying north China.

Subsequently, Street Angel was seen to mark one of the last products of the "golden age of Chinese cinema" of the 1930s, before artists were forced to retreat to Shanghai's foreign concessions and finally came under Japanese propaganda control.

[3] At the end of the Second Sino-Japanese War, Yuan and Chen Bo'er were sent by the Communist Party to takeover what remained of the Manchurian Motion Picture Association, which eventually became Dongbei Film Studio.