China targets American films over Trump’s tariffs. Here’s why that poses a big risk for Hollywood.
With the United States and China locked in an escalating trade war fueled by President Trump’s tariffs, America’s biggest economic competitor is not limiting its response just to material goods.
China said Thursday it is also targeting the U.S. film industry, restricting access to the world’s second most important film market.
“We will follow market rules, respect audiences’ choices and moderately reduce the number of imported American films,” China’s National Film Administration wrote on its website on Thursday, according to Reuters.
Earlier this week, two highly influential Chinese bloggers with connections to the communist government’s official news agency wrote that local leaders are considering a possible ban on American films altogether. The NFA’s decision to take a less aggressive approach likely means the impact on Hollywood’s bottom line will be limited, experts told Reuters.
Still, the move is a signal that China is willing to target America’s cultural capital as a way to hit back at Trump. With both sides continuing to increase their economic attacks by the day, this could very well be a harbinger of a complete ban on American films in China.
Chinese box office boom
When it comes to the film industry, there’s the US, China and then there’s everyone else. U.S. moviegoers spent $9.1 billion at the movies in 2023, accounting for 27% of the total global box office that year, according to estimates from film industry tracking firm Gower Street Analytics. China grossed $7.7 billion, 23% of the global market and more than $6 billion more than Japan, which ranked third.
For most of the 20th century, the Chinese box office was largely inactive. But then it exploded throughout the 2010s, growing from less than $1 billion in 2011 to more than $9 billion in 2019. Hollywood movies played a big role in that, as American studios turned to the interest of China’s huge population to rake in huge revenues for its big blockbusters. Avengers: Endgame, released in 2019, it grossed $632 million in China alone, on its way to becoming the second-biggest film of all time.
American studios typically only receive about 25% of the money their films make in Chinese theaters, but that’s still a pretty big windfall for Hollywood if revenue figures can get that high.
Hollywood is losing its grip
American productions aren’t making as much money as they were a few years ago, for two reasons: China’s overall film market has shrunk significantly, and local audiences are now increasingly choosing to watch home-made films over Hollywood imports.
Chinese domestic films now reportedly represent around 80% of the annual box office, up from around 60% before 2020. The extraordinary earning power of China’s homegrown film industry was on striking display earlier this year with the release of Ne Zha 2, an animated film that has grossed nearly $1.9 billion since its release in late January. It is already the highest-grossing animated film ever made by any country and currently sits at number 8 on the all-time box office list.
Despite these shifts, China is still an important market for Hollywood. There were five American films that grossed at least $50 million there last year – led by Godzilla x Kong: The New Empire, who made $132 million. Chinese viewers also spent $14.5 million to watch A Minecraft movie during opening weekend last week.
Banning their films from China probably wouldn’t be an extinction event for American studios, but it would be a blow to an industry that’s still bringing in billions of dollars less per year than it did before COVID sent revenues falling off a cliff.
“Such high-profile punishment of Hollywood is a win-win move by Beijing that will certainly be noticed by Washington,” Chris Fenton, who wrote a book on Hollywood’s relationship with China, told Reuters.
Whatever China gains from its modest rebuke of Hollywood, the US is simply not in a position to retaliate in kind. That’s because Chinese films are already making next to nothing in American theaters.
