ClandesTime 164 – China’s Influence in Hollywood
China is without doubt a major player in Hollywood. Both private investment and state regulations and censorship have played a significant role in the American movie business in recent years. This week I examine the Chinese influence on Hollywood, both in terms of the shape of the industry and the shaping of film content. I examine how both the US and China have adopted protectionist mentalities, but are forced to work together for mutual economic benefit.
First, a few basic facts. China now has more movie theaters than the US, and is widely predicted to have the largest domestic market for films by 2019. Despite this, under current arrangements only 34 US films are allowed direct access to the Chinese market per year, and there are unofficial ‘blackouts’ where only domestic films are shown during the most profitable parts of the year.
This is big money we’re talking about – billions of dollars. Some blockbuster films take more money in China than they do in the US. This trend is likely to continue due to supply and demand – the American movie market is saturated with films we’ve all seen before, whereas for Chinese audiences this is still a relatively new development. Much like Saudi Arabia, there is a potential to make obscene amounts of money out of absolute schlock like Transformers 5.
Like I say, this is a relatively recent phenomenon for everyone involved. In 1994 the Chinese government first started allowing US films to be shown in the country. But the numbers were low – initially only 10 films, later going up to 20. In 2007 the US brought a World Trade Organisation case against China for its heavy restrictions on import and distribution of American-made films. At that time only 20 films were allowed, and the government often placed limits on how many DVDs could be sold, and so on. The WTO found in favour of the US and gave China until 2011 to comply with ‘free trade’ laws. They didn’t, so in 2012 the US and China negotiated a deal to stave off further action from the WTO. You can read about this in a State Department document I published recently.
Under the new deal the Chinese government increased the quota from 20 to 34, but said that the additional 14 films had to be 3-D or IMAX films, maintaining the standard format film quota at only 20. This is one of the main reasons we saw such an increase in IMAX and 3-D films at this time, it wasn’t so much for Western audiences but for the Chinese market. The new deal also increased the revenue-sharing percentage for the American studios, from 13% to 25%. However, the practice of blackouts has continued.
In 2015, under pressure on a variety of issues, during the Chinese President’s visit to the US the China Film Group met with the MPAA in a secret Hollywood summit to agree terms. The Chinese government opened up its cinema ticketing to outside auditing, amidst allegations of ticket-rigging to make it look like domestic films were more popular than they really were. It also expanded the number of films imported by China for a flat fee.
The 2012 deal expired in 2017, and negotiations on a replacement are ongoing. This hasn’t been helped by the Trumpist rhetoric about a trade war, and in the meantime the situation has more or less continued as it was under the deal struck in 2012. The new terms agreed in 2015 are yet to be implemented, as far as I can tell.
One way that US studios have tried to get around this hard quota is by going into co-production with Chinese investors and studios. If a film was partially made in China, with Chinese money, then it doesn’t count as an import and thus bypasses the quota. This is what led to Transformers 4 being co-produced with a massive Chinese conglomerate, who demanded that famous Chinese performers be cast, and is why the final third of the film is mostly in Chinese. Of course, who gives a damn about the dialogue in a Transformers movie, but I’m simply using this as an example of how industrial concerns drive content. The film made a ton of money – opening to over $90 million in China alone, and setting a new record for the IMAX version. It’s a terrible film, granted, but they’re all terrible films, I don’t think this one was any more terrible due to these concerns.
However, things got a bit difficult when a state-backed Chinese tourism company sued Paramount and China Movie Channel for $27 million for violating their product placement agreement. Parts of the movie were shot in Wulong Karst National Park, and Wulong Karst Tourism paid for their logo to be included in the film, and for a credit or subtitle in Chinese characters identifying where those scenes were filmed. The final film didn’t meet these specs, so they filed a lawsuit. This dragged on for years and eventually a Chinese court ordered Paramount to pay around $295,000.
The flipside of this is Chinese investment in Hollywood. As China has grown into an economic powerhouse it has an excess of cash, and if all that money was invested in, say, Chinese real estate it would cause a massive increase in domestic prices. So the Chinese government has encouraged investment in other countries, particularly the US. Unsurprisingly this has been met with the usual American protectionist, reactionary nonsense about the Chinese are taking over and it’s the globalists’ plan to ruin America. None of these people seem to realise that most countries actually want foreign investment, particularly Western countries that have been in real-terms economic declines for decades.
Then again, these are the same people who think that the Federal Reserve somehow makes Americans poorer, when in reality it functions as a kind of national credit card. They borrow money, a huge amount of it from China, that they’ll never pay back, and use that money to buy real things, a huge amount of it from China. They’re getting real stuff, on credit that doesn’t really exist or have inherent value, and they somehow think they are the ones being hard done by. These people simply don’t understand economics, and nor do their in-bred, fuckwit audiences.
Just as Hollywood studios have found ways to try to bypass the 2012 deal, Chinese investors have too. The way the Chinese government sees it, if money made by showing films in China is going to leave the country to end up in the bank account of a Hollywood studio, they can recycle some of that by buying stakes in Hollywood studios. See, they’re nowhere near the puppet economy for the globalists that simple-minded conspiracy theorists like to portray them as, largely because of one quote by George Soros.
So, for four or five years Chinese investment in Hollywood was on a very large scale. It often works by the state-owned and controlled China Movie Channel buying a stake in a movie and then selling that stake on to domestic investors. This is what happened with Mission: Impossible – Rogue Nation.
We’ve also see Chinese companies set up their own studios in California, and enter into long-term co-production deals with major studios. China’s largest entertainment company, Wanda, bought Legendary Pictures (who make a lot of monster movies like Godzilla and Jurassic World), and are now the largest theater-chain owner in the US having bought up AMC and Starplex. Between 2014 and 2016 investments totalled more than $5 billion.
Then, in 2017, the investment suddenly dried up. Part of this was Chinese government restrictions on ‘capital flight’ because the Chinese currency was suffering. It also appears that some private investors in these big co-production deals felt the assets had been over-valued and they hadn’t got their money’s worth. Several major co-productions such as The Great Wall, starring Matt ‘literally a plank of wood’ Damon, hadn’t done as well as expected, and the growth in the domestic Chinese market had slowed. The other major factor was that the 2012 deal was coming to an end, and with the ‘trade war’ political rhetoric no one knew what the replacement deal would look like, or how long it would take to negotiate.
China vs the US: Protectionism vs more Protectionism
What especially interests me from a political point of view is the resistance to these developments in the China-Hollywood relationship. From my point of view this is just the inevitable consequences of the world’s two biggest economies being so co-dependant. However, it is more complex than the usual relationship whereby China buys US debt to prop up the US economy and maintain a market for its own products. This isn’t about Chinese films being sold in America, it’s more about American movies being sold in China.
Nonetheless, we see the same rhetoric as we did when, for example, Chinese football clubs started buying big-name players from European teams. This was almost universally reported as a threat, or as some kind of attack. Reverse snowflakeism is everywhere, as though any country outside of Western Europe investing heavily in raising the quality of its league is some kind of offensive, controlling ploy.
Hence, the Chinese practice of blackouts has been accused of being protectionist. It undoubtedly is protectionist, both culturally and economically, so I’m not disputing the accuracy of the label. I’m posing the question as to why China should open up its huge domestic film market to cultural domination by Hollywood. Because the accusation of protectionism carries with it the implicit premise that they should adopt a free trade approach and have no limits or restrictions on film imports.
This is a long-standing issue in the politics of film economics. Going all the way back to WW2, the OSS identified the export of US motion pictures as vital to the propaganda effort. In the 1950s the head of the MPAA Eric Johnston discussed in his letters with Allen Dulles how to remove the film quotas in target countries, to enable more US films to be exported to them.
So why should any country merely accept US cultural hegemony, given that it’s been a strategic priority for US intelligence for the best part of a century? Let alone a country like China that has a large domestic movie industry and the money to develop it.
The other part of this is that US senators challenged private Chinese investors’ efforts to buy into the US film industry. Instead of welcoming investment from private entrepreneurs they’ve got all protectionist about who owns Hollywood studios. A similar thing happened in the late 80s when Japan was also investing heavily in US industries, not just cinema.
For example, Rep. Chris Smith, a Republican from New Jersey said, ‘Would we raise questions if Russia or Iran was buying large parts of US media and entertainment companies? Of course we would. Raising questions about Chinese investment is no different.’ In typical protectionist fashion he draws no distinction between a private investor who happens to be Chinese and the nation of China. This is one of those rhetorical tricks that’s so common, especially when it comes to superpowers like Russia and China, that it bugs me.
It’s the double standard and hypocrisy that I think is especially stupid. American politicians expect that the Chinese government should allow US studios unlimited access to the Chinese market, both for profit and for cultural hegemony. But private Chinese citizens investing in American businesses is somehow suspicious, as though it’s part of some plot by China to take over America. The reverse of the actual situation, the reverse of reality, is what these idiots believe, or pretend to believe.
That was the respected China scholar Stan Rosen talking a bunch of hypocritical horseshit. He says that the US should consider culture a ‘national security issue’ (as though it doesn’t already) and that we don’t want the Chinese ‘controlling what we see through media’. He also complains that we don’t have the means to do that to the Chinese, totally buying into the Hollywood fantasy that we’re somehow up against the odds.
So I thought I’d test this claim of Rosen’s, by looking at a list of the most popular films in China and seeing how many were influenced by the US government and related American entertainment liaison offices. The first American movie on the list is at number 6, The Fate of the Furious, which was supported by the Pentagon. Number 9, Furious 7, hired Rich Klein as a consultant. Jurassic World was supported by NASA. Avengers: Age of Ultron, NASA and the Science and Entertainment Exchange. Mission: Impossible Fallout, the Pentagon. Transformers, the Pentagon. Avatar, the Pentagon.
In fact, almost all of the biggest American movies in China were produced with the help of the US government, primarily the Pentagon who we know like to rewrite scripts for political reasons.
So, Rosen is flat out wrong in what he’s saying, but he’s reflecting a general attitude whereby our efforts at cultural hegemony are ignored while their efforts are played up as powerful conspiracy to manipulate us through pop culture.
China’s Influence on Movie Content
Despite my criticisms of the hypocritical reaction of many commentators there is a real concern here, about how this affects movie content. The industrial objections are little more than a badly-written joke – for the country most integrally involved in the globalisation of capitalism to object when someone buys something is absurd.
But the influence on movies is very real.
One source I encourage people to read is a report by the US-China Economic and Security Review Commission, titled Directed by Hollywood, Edited by China: How China’s Censorship and Influence Affect Films Worldwide. While it is couched in much of the same protectionist lingo as most of the coverage of this unfolding phenomenon, it is well researched and highly informative.
It discusses China’s State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), the government censorship board. This branch of the Chinese government has banned certain films such as Brokeback Mountain and The Departed, for violating rules about nudity, language and violence. China has no ratings system so all films are supposed to be suitable for all ages. However, The Flowers of War, a Chinese-produced film starring Christian ‘literally a plank of wood’ Bale contained graphic violence in its depiction of the Nanking massacre. But the film stoked anti-Japanese sentiments and was considered to be China’s best bet for an Oscar so the censors left it alone.
This has an upstream affect on US film-makers who want their products to be available to the massive, lucrative Chinese market. As the report comments:
‘In seeking SAPPRFT’s approval, some U.S. films make alterations to scripts, scenes, and casting with China in mind. In some instances, particularly in cases of U.S.-China coproductions, changes are made to access Chinese audiences and compete in the Chinese market. Other alterations, however, are made out of necessity, with SAPPRFT refusing to approve a movie for import unless violations of China’s film standards are addressed.’
They go on to cite a number of films, such as X-Men: Days of Future Past, which included lengthy scenes set in Hong Kong and a cameo by a Chinese boy band. Likewise Skyfall was partially shot in China and included some memorable scenes filmed in Shanghai and Macau. Looper was co-produced and among the demands made by the Chinese production company was to move key scenes from Paris to Shanghai, and to cast a Chinese actress in a major role.
Transformers 4 and Iron Man 3 included product placement from Chinese companies, and for Iron Man 3 they even shot additional scenes just for the Chinese version, featuring famous Chinese performers. You will notice that at the end of the film when Tony has his operation to remove the shrapnel he got from the first film that the medical staff are mostly Chinese.
As to films that had to be recut to appease the censors before being distributed, there are a number of known examples. In China, Mission: Impossible 3 was shown without a scene showing clothes drying on a clothesline in Shanghai, because they felt it was not a positive portrayal (though it is an accurate one). Skyfall had to lose a scene in which Bond kills a Chinese security guard, because the censors didn’t like a Chinese citizen being killed by a foreigner.
2010’s The Karate Kid was co-produced with a Chinese studio but the censors didn’t like the fact the villain was Chinese. In total, 12 minutes were chopped out of the film before it could be shown in China. A 3-D version of Top Gun was banned from China because it showed American military dominance. Men in Black III had to remove a scene featuring the flashy thing that is used to erase people’s memories, because the censors felt it might be a reflection on China’s internet censorship policies. Censorship to cover up for censorship.
Indeed, this goes back to before this recent entanglement between China and Hollywood. In 1997, the Chinese government found three films so offensive that it didn’t just ban the films, it banned the studios behind them. The films were Kundun, Red Corner and Seven Years in Tibet, which led to Disney hiring none other than Henry Kissinger to smooth things over in Beijing and allow them to distribute their films in China.
So we are talking about a very powerful country with a massive and therefore influential film market. It’s also a largely untapped market – even by finding ways round the quota only a few dozen American films gain access to Chinese audiences, most do not. Even some that were altered – such as World War Z, which removed any mention of the origin of the plague as being China – were never released in the country. On top of that we have a state censorship board who are somewhat unpredictable and are willing to butcher a movie before granting permission for it to be released. On top of that we had a brief but cash-heavy period of investment in Hollywood by private Chinese interests.
All of which acts as a profound discouragement to Hollywood studios to make films that portray China negatively. Ironically, one of the things that’s positive about China – that their system has lifted three-quarters of a billion people out of poverty – also remains unsaid in Hollywood films. For all the objections about China insisting on socialist values in films, there isn’t much evidence of that having any effect. Whereas Chinese nationalism is having an identifiable effect on films.
To sum up, one journalist commented ‘do we really want to see our filmmakers in thrall to a repressive regime such as China?’. Of course, the answer is ‘no’. But we also don’t want our film-makers to be in thrall to repressive regimes like Britain and America, who have done everything from invading a string of countries based on outright lies to running a worldwide kidnap and torture program. We don’t want them to be in thrall to secretive agencies like the CIA and FBI, who remove reference to torture and mass surveillance before agreeing to support a film. We don’t want them to be in thrall to the military and the military-industrial complex, but they are. Curiously, that has drawn less than 1/10th of the media coverage that the China syndrome has. As always, it’s easy to blame ‘them over there’ than to take an honest look at our own societies.
Indeed, given everything we’ve looked at in the past few episodes a very different picture of Hollywood emerges. Rather than the bastion of liberalism it likes to portray it as, and its critics like to label it as, in reality they are willing to bow to almost any authority. Nazis, the FBI, Nazis within the FBI, the Pentagon, the State Department, the CIA, the Chinese government. Hollywood is a vehicle for the political agendas of all kinds of dangerous institutions.
As such, China’s growing influence in the industry is not really a resistance to Hollywood Hegemony, more an attempt to use it for China’s own purposes. They will continue to resist American cultural hegemony for the time being, but the Chinese government is more than happy to co-opt parts of Hollywood to promote itself. Which begs the question – what other influences are there, that we don’t know about?
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