- China is preparing to celebrate the 70th anniversary of the founding of the People’s Republic of China.
- In the run-up to this celebration the Communist Party has ramped up its censorship of domestic movies, with at least two long-awaited Chinese blockbusters getting unexpectedly axed this summer.
- This censorship has in turn opened up the Chinese box office for Hollywood films to fill the void, negating fears that the US-China trade war could crush revenue for American movies in the country.
- Experts told Business Insider that Hollywood had a “big opening” to take advantage of China’s increasing censorship of domestic movies.
- Visit Business Insider’s homepage for more stories.
The US-China trade war has ignited fears that Hollywood, which is increasingly relying on China for financial success, would lose out on its biggest market.
But those fears are misplaced, experts say, and China’s ever-tightening censorship of its domestic movies means a gap is actually opening up for American blockbusters to fill.
China’s ruling Communist Party has been particularly sensitive and paranoid over its censorship this year as it prepares to celebrate the 70th anniversary of the founding of the People’s Republic of China on October 1.
The party is already known for censoring any and all content seen to jeopardize its morals or hold on power, whether by deleting social-media posts and detaining livestreamers or cutting out movie scenes it considers uncouth, like those depicting sex and fighting in “Game of Thrones” and LGBT romance in “Bohemian Rhapsody.”
China is preparing for its big anniversary in October – the first significant anniversary since it emerged as a major global power, which is expected to be celebrated with a massive patriotic military parade.
As part of those preparations it has further ramped up its scrutiny of domestically made movies, with at least two long-awaited Chinese blockbusters being cancelled this summer.
Neither of those cancellations were explicitly blamed on censorship concerns, but experts say it was pretty obviously the reason.
In June, Chinese censors cancelled the long-awaited box-office opening of “The Eight Hundred,” an $US80 million, patriotic World War II movie that focuses on the Communist Party’s 1949 rivals, the Kuomintang.
Beijing blamed the cancellation on “technical reasons,” Variety reported. But according to the magazine, the film was axed because the China Red Culture Research Association – a research group sympathetic to the ruling Communist Party – said the film depicted the Kuomintang too sensitively.
“It is a reversal of history, and misleads the audience,” the group’s secretary-general, Wang Benzhou, said, according to Variety. “If left unchecked, it will certainly deprive the entire Communist Party of its historical basis.”
Censors also pulled “The Hidden Sword,” a long-awaited summer movie about a 1930s military officer who led the Chinese fight against Japanese soldiers at the Great Wall, for “market reasons.”
Again, critics are sceptical about the stated reasons for the film being scrapped, and some are blaming the fact that the movie’s hero fought for the Kuomintang instead of the Communist Party, the South China Morning Post and Variety reported.
“Anything that deals with the party history or anything that’s at all controversial, especially about the Chinese past, has not been allowed to show in Chinese theatres,” Stanley Rosen, a political science professor and cinema expert at the University of Southern California, told Business Insider.
Xin Zhang, an analyst at IHS Markit focusing on Chinese cinema, told Business Insider the country’s “strict censorship” was “not only for foreign films, but also for local films.”
This is reflected in the decreased number of films, both domestic and foreign, shown in China this year. Sixty-eight movies were scheduled to be shown in the country from late June through August, Quartz reported in July, citing statistics from China’s Maoyan movie-ticketing site. That was down from 137 in the same period last year.
Chinese domestic censorship has cleared the way for Hollywood to take advantage
In tanking the release of some of its biggest domestic movies, Beijing has actually made way for American blockbusters to fill the gap.
This has negated Hollywood producers’ fears that China would use the threat of not importing Hollywood films as a stick to beat Washington with in the two countries’ trade war.
Hollywood studios are heavily reliant on overseas box offices for revenue, with China being the most important market.
Under an official quota, China can publicly screen 34 foreign films a year. These movies generally come from countries with sizable movie industries like the US, the UK, South Korea, and India, and the film producers take a cut of the box-office earnings made in China.
While countries like the UK do contribute, Hollywood films account for 85% to 90% of the total number of imported films in the Chinese market, Zhang of IHS Markit said.
The quota has been surpassed in each of the past two years. It was meant to be renegotiated in 2017, but that renegotiation has been kicked into the long grass, possibly because of the trade war, according to both Reuters and the South China Morning Post. China imported 40 revenue-sharing films in 2017 and 42 in 2018, according to IHS Markit statistics.
Hollywood producers typically take 35% to 40% of the market share from Chinese cinemas, Zhang said.
US and Canadian box offices earned $US11.9 billion on all films last year, while China alone earned $US9 billion, according to the Motion Picture Association of America.
So precious is the revenue made by Hollywood movies in China that producers have even appeared to self-censor movies to pass censors and ensure their films are shown.
Most recently the film “Top Gun: Maverick” appeared to censor itself by removing a Taiwanese flag from the jacket of its titular character, Maverick, played by Tom Cruise.
Having feared that the Chinese box office revenue stream would dry up as a result of the trade war, Beijing’s scrapping of its own blockbusters “leaves a big opening for Hollywood blockbusters to show, even over the summer,” USC’s Rosen said.
And the numbers show it:
- “Avengers: Endgame” broke box-office records by earning $US614 million in China alone in May. It made $US850 million in the US by comparison, according to Forbes.
- “The Lion King” raked in $US97 million in China in July.
- “Spider-Man: Far From Home” earned $US97.2 million in its opening weekend in July.
- “Hobbs & Shaw” earned $US164 million in its first 10 days in China – surpassing the $US157 million earned in North America over its first three weekends, Variety reported. This was actually an underperformance in the country given the popularity of the franchise and Dwayne “The Rock” Johnson.
“Chinese people have continued to show enthusiasm in watching big Hollywood films,” Jue Wang, a lecturer at the Leiden University Institute for Area Studies, told Business Insider.
Hollywood’s success at the Chinese box office in 2019 counters fears among film producers that China would stop importing American films to punish President Donald Trump over the trade war.
The Washington Post in June cited producers as saying that they were already working under the assumption of a Chinese freeze on American films and that the industry was “operating as if it’s close to a total shutdown.”
“People say with the trade war, for example, is going to hurt Hollywood,” Rosen told Business Insider. “But in fact for a variety of reasons the trade war has not hurt Hollywood blockbusters at all.”
The Communist Party’s censorship isn’t the only reason behind Hollywood’s unexpected success in China, though.
China, in a way, can’t afford to boycott all Hollywood films. The country’s nascent film industry doesn’t make enough movies to prop up the market alone – the US and the UK each produce about 700 films for theatre release, while China produces only 300, Zhang said.
“So they do need a lot of diversity and a lot of options for cinemagoers,” she said.
Another reason behind Hollywood’s summer boom is that there have just been a bunch of high-profile blockbusters this year, and China simply doesn’t want to miss out.
“Hollywood this year has had very strong titles, like ‘Avengers: Endgame,'” Zhang said. “It’s a very big title and has performed very well. Not only in China – in every country, every market.”
Hollywood takes advantage, but independent US movies are suffering in China
Not all American movies are safe from the trade war, though. Independent, lower-budget films have been suffering since 2017, months before Trump began his trade war.
After Beijing ordered businesses to clamp down on investing abroad in 2017 – an effort to control the amount of money leaving the country – one of the first things that lost Chinese investment were independent films, Wang said. Trade tensions have further exacerbated this hesitancy, she said.
Rosen said: “No one knows whether the Chinese authorities are going to approve showing these films because of the trade war with the US, for example whether theatre owners will show these films in theatres.”
“Hollywood’s doing well, but independent filmmakers are not,” he added.
Hollywood’s China boom might not last for long, though.
Chinese regulators are “mercurial,” and business with the US is “subject to geopolitical crosswinds,” The Washington Post noted in its June story.
Aynne Kokas, a University of Virginia media professor who is an expert in Chinese cinema, also told The Post that instability in the Chinese box office “poses a dire situation for Hollywood.”
“It’s a very dangerous financial position to be reliant on Chinese box office to recoup profits,” she said.
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