Having suffered setbacks in its attempts to improve its image around the world, China now appears to have found the key to success by investing in Hollywood.
Here’s the payoff for Hollywood: In return for working with Chinese investors to produce films acceptable to Beijing, American film studios are sharing in China’s movie theater profits.
With U.S. ticket sales relatively flat, analysts had been predicting for some time that China was likely to become the world’s largest box-office market within a few years.
Given a slowdown in 2016 in China’s ticket sales, though, those predictions are looking overly optimistic at the moment.
Meanwhile, given China’s censorship regulations, Hollywood executives have been paying a price for cooperating with China on film productions. In numerous cases, industry leaders have curtailed their creative freedom in deference to China.
This has led critics to charge that Hollywood has from the start engaged in an unacceptable degree of self-censorship.
This can work through casting decisions, the elimination of content viewed in Beijing as “sensitive,” and the insertion of content, images, or story lines considered “positive” by the Chinese side.
When it comes to casting, the actor Richard Gere discovered early on that he can no longer land roles in big Hollywood movies because of Chinese animosity towards him.
Gere starred in several Hollywood blockbusters over the years. But he also stirred Chinese antagonism because of his support for Tibetan causes. A practicing Buddhist, Gere called on participating nations to boycott the Beijing Olympics of 2008 because of China’s repressive policies in the Tibetan region.
Gere told The Hollywood Reporter two months ago that he "had an episode where someone said they could not finance a film with me because it would upset the Chinese."
Gere added that in another incident a Chinese filmmaker told him that if he worked with Gere, he and his family would never be allowed to leave China and he would never be able to work on films again.
At this stage in his life, Gere said, he’s happy getting roles working with small, independent filmmakers.
A slowdown in Hollywood deals
Although Chinese companies made record overseas investments last year, Beijing’s concerns about huge capital outflows in recent years have led to new regulations that have slowed the pace of outbound investments. And this could at least temporarily stall prospective Chinese deals with Hollywood.
Dalian Wanda Group's Chairman Wang Jianlin, one of China's richest men, has been the biggest foreign investor in Hollywood. But in an interview with The Financial Times this week,Wang said that he now plans to shift his investment focus to domestic Chinese ventures.
Wang stirred controversy with his failed attempt to buy the Hollywood entertainment and TV production firm Dick Clark Productions (dcp) for $1 billion. The privately owned firm has a sterling reputation as well as high-level Hollywood connections.
In his interview with The Financial Times, Wang said that his failure to close the deal with dcp was due to Chinese government regulations that have been slowing down China's overseas foreign investments.
The Dalian Wanda Group purchase last year of Burbank-based Legendary Entertainment early last year for $3.5 billion drew attention from a number of U.S. congressmen. It was the largest Chinese investment in a U.S. film studio to date.
In an open letter last year, 18 members of the U.S. Congress expressed concern over Wang’s moves and began discussing a possible expansion of regulatory controls over foreign investments in the U.S., including American “soft power” assets such as movies.
Wang, a billionaire, has stated in the past that he’s not interested in changing Hollywood movie content and wants to leave Americans in control of running the studios.
But this would still leave plenty of room for self-censorship.
And in the end, it is China’s State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT) that has the ultimate say as to which films will be approved for Chinese investment.
China can invest in American movies through three types of arrangements: revenue sharing films, flat-fee movie purchases, and co-productions with Hollywood studios.
Co-productions carried out in China have become popular with both sides. For the Chinese, it means being deeply involved in production and learning from the collaboration.
For the U.S., it means cheaper costs by filming in China. But it also means more profit. Co-produced films bypass a quote of 34 foreign films a year that Beijing allows to be shown on Chinese screens.
Co-produced films aren’t considered foreign, therefore bringing to producers 43 percent of ticket sales rather than the 25 percent gained by foreign films.
Finally, co-production means that a Chinese partner can help a Hollywood studio get through the regulatory process and deal with the bureaucracy at China’s State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT).
But even then things can go wrong, because censorship officials fear making even small mistakes in an atmosphere of tightened media controls under China’s President Xi Jinping, who has called on China’s media to “tell China’s story” and emphasize the positive.
The co-production blockbuster that failed
One recent movie, “The Great Wall,” appeared to be a co-production film that had everything going for it. First, the film featured Matt Damon, a leading American movie star. Second, the famous Chinese film director Zhang Yimou directed the film.
With a production budget of $150 million backed by several leading Hollywood and Chinese studios, the film was the most expensive Hollywood co-production filmed in China to date. However, it quickly drew mostly unfavorable reviews from American movie critics as well as Chinese fans commenting on it through social media.
But the film’s content must have been pleasing to China’s censors.
Damon plays a foreigner who came to China to search for gunpowder in a long-ago era but ends up serving as a mercenary alongside Chinese soldiers bravely fighting locust-like monsters who attack the Great Wall.
As The Washington Post's chiefmovie critic Ann Hornaday describes it, Damon's character William Garin proves to be less a hero than "a foil for ideas of national identity and cultural chauvinism that China is eager to export for global consumption."
Hornaday then went on to criticize what she called the movie’s wooden dialogue and stiff performances.
In the end, the film lost $75 million.
“The Great Wall” had the potential to become an epic film along the lines of “The Lord of the Rings.” But its propaganda message may finally have been too obvious to make it believable.
What lessons can be learned from “The Great Wall?” Could a little less censorship make co-productions more attractive to viewers?
Unfortunately, Hollywood is now doing the censorship job for China, and the habit of self-censorship may be deeply ingrained.
Robert Daly, director of the Washington, D.C.-based Kissinger Institute on China and the United States at the Wilson Center, notes that “there have been no films in recent years that depict the Chinese Communist Party or mainland Chinese characters in a critical light.”
"Instead, China has saved the world in '2012' and 'The Martian,'" he adds in an opinion piece written last October for The Lost Angeles Times.
How it all came about
In a report issued in March this year, Shanthi Kalathil, the author of numerous scholarly publications, describes how China discovered the value of using Hollywood to improve its image.
Her report was published by the Center for International Media Assistance, which is part of the U.S.-based National Endowment for Democracy (NED).
China has seen America derive “tremendous soft power” from its culture and entertainment, according to Kalathil.
China, she says, discovered that through Hollywood, “in a form of market-based judo, it can use the soft power strength of the United States for its own purposes.”
Whatever the ups and downs in the box office market may be, Hollywood seems to be in for the duration.
As a front-page article published in The Wall Street Journal on April 19 makes clear, "…Hollywood has become so entangled with China that the movie industry can't run without it."
This seemed to be confirmed by former U.S. Senator Christopher Dodd when his replacement as Hollywood’s top lobbyist by Charles H. Rivkin was announced on April 29.
According to The New York Times, Dodd, while serving as president of the Motion Picture Association of America, was "credited with helping to gain distribution for Hollywood movies in China."
The Times says that "China is likely to be Mr. Rivkin's initial focus.
Dodd said that if you ask Hollywood executives what their three major goals are, “they will tell you China, China, China.”
Dan Southerland is RFA’s founding executive editor.