J. Faye Yuan

April 22, 2013

Thesis

Expanding the Market for Loyalties: the Hollywood-China Story Revisited

Introduction

Hollywood has officially descended upon China, and its lure is mesmerizing. It’s hard to go a day without encountering a headline detailing the sheer magnitude and scale of landmark deals done between Hollywood studios and their Chinese counterparts. Just look to the box office, and you’ll be hard-pressed to not find a movie with some sort of

Chinese-inspired character and landscape in the plot and a Chinese co-production team behind it. Most recent examples include Looper, Cloud Atlas, Red Dawn, and Iron Man

3, just to name a few. The list in the coming years will only get longer, as China is poised to emerge as the country with the largest movie-going population in the world by

2020 surpassing the United States1. Already, it is on course this year to overtake Japan as the largest export market for Hollywood movies.

The Chinese film industry has been rising at a pace 4 or 5 times faster than its

GDP for over a decade now, and there’s no sign of a slowdown2. From 2001 to 2007, theatrical revenue increased at a 34 percent compound annual rate (as measured in US dollars); from 2008 to 2012, the pace quickened to 43 percent per year. So far in 2013,

China’s movie revenue has increased 51 percent, and its business is growing more than

1 Ernst and Young. “Spotlight on China: Building a Roadmap for Success in Media and Entertainment.” Summary report 2012. 2 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 6 times faster than its GDP3. North America’s theatrical business, by contrast, has been growing slower even than its recession-worn economy, at an annual rate of just over 1 percent since 2002.

There are three driving factors behind this phenomenal growth story. First, China is undergoing the largest and most rapid development of a middle class in human history. Secondly, cinema construction is booming. Thousands of new screens are opening each year, affording millions of potential customers the opportunity – many of them for the first time ever – to enjoy the cinema experience in modern multiplexes.

Thirdly, The Chinese population has embraced foreign and domestic movies with enthusiasm. For the most part, high-ticket prices and generally mediocre films haven’t deterred them from filling up theaters to capacity, though this may change with time.

The second point, while a major driving force, also remains as the biggest growth inhibitor, as China is still experiencing a shortage of screens. There are currently about

13,500 movie screens in 3,700 theaters across the country, the second largest national total in the world4. However, with its 1.3 billion population, China is still woefully under- screened, with just one per every 100,000 people. The U.S. has almost 40,000 screens, or one per roughly every 8,000 people, according to the MPAA. To reach the U.S. level of screen density per capita, China would have to build an additional 155,000 screens5.

Still, China is rapidly catching up. With an average of nine new cinema screens popping up in the country every day, China’s building boom has given birth to new shopping behemoths that would relegate the Mall of America into obsolescence; and

3 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 4 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 5 Cain, Robert. China Film Biz. http://chinafilmbiz.com/

2 the most profitable anchor tenant of these shopping malls is no other than movie theaters. Chinese moviegoers can’t get enough of Hollywood films, and they are increasingly “voting with their feet” at the box office choosing Hollywood films over domestic ones. Movie theater operators in large coastal cities charge as much as

RMB180 ($28) per ticket to young consumers who seem more than willing and able to splurge on a night replete with Hollywood stardom, animation, special effects, and action sequences6. Going to the movies represents the archetypal “white-collared date” in China, and the market size is rapidly growing, with cinema operators expanding their presence in second-tier cities and beyond. Box office revenue jumped 30% in 2012, while growing 20% seven years in a row. This all comes at a time of global economic slowdown when box office revenue in North America and Europe has plateaued7.

Hollywood no doubt has hit the jackpot. In the first six months of 2012, Chinese- language films, many of them co-productions with Hong Kong filmmakers, accounted for less than 10% of box-office receipts grossed by the top 10 films in China, as Hollywood imports such as Titanic 3D, Mission Impossible 4 and The Avengers 3D cleaned up effortlessly at the box office8. These developments invite scrutiny, as one begins to ponder the unfolding film landscape: Does the entry of Hollywood films in China contribute to the expansion of the media landscape by introducing new voices to the existing marketplace as presided over by the state?

Revisiting the Framework

6 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012. 7 Sinica Podcast. “Hollywood Comes to China.” September 21, 2012. 8 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012.

3 This paper uses the “market for loyalties” framework to explain the unfolding media landscape in China. Media is seen as a tool, as part of the state’s arsenal, to assert national sovereignty over the creation and evolution of national identities. By extension, the use of imagery can be interpreted as a substitute or supplement to the use of force9.

Sovereignty, in other words, is enforced through emphasis on imagery rather than on force, as part of the state arsenal to build loyalty amongst the populace.

It is, therefore, in the state’s best interest to maintain monopolistic control over this power – the power to control the creation and distribution of imagery through the national media. At the same time, China has a keen interest in modernizing and privatizing its economy, media included, which became the centerpiece economic agenda of Deng Xiaoping’s reform and opening era beginning in the early 1990s. This means that the media space represents a new battleground between private and public actors, who have an intrinsic interest in the construction of a new national identity, a high stake in shaping a set of political views and cultural attitudes10.

In short, the market for loyalties framework describes the competition for the hearts and minds of the general public, as large-scale competitors compete for allegiances in the marketplace of the media. The sellers and producers in this case are the governments, local and national, as well as interest groups, businesses, and institutions, which together comprise the power structure. The buyers are the Chinese citizens; the product being a set of national identities, and the functioning currency is the

9 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press. 10 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press.

4 loyalty and/or citizenship. In other words, to buy into the national identity means to subscribe to a set of political views and cultural attitudes as conveyed, distributed, and sold to the public through the media in the form of images, narratives, and legends11.

To maintain its power, the power structure seeks to construct national identity before placing it in the media, where the public can “purchase” this identity, while

“paying” for it with their loyalty and citizenship. Thus, the entry of new, independent voices in the market for loyalties largely depends on whether those voices will strengthen, or in the very least not threaten, the existing power structure.

In this paper, I argue that Hollywood’s foray into China represents an arrival of new images, narratives, and legends, thus broadening the media landscape through the expansion of the number of “sellers” and through the diversification of the actual product being sold, i.e. national identities. While officially remaining harmless to the governing power structure, the underlying power struggle in the shaping of cultural attitudes and norms is slowly turning against the Party in favor of private actors, Hollywood being one of them. At the same time, the state is confronted with a new generation of media consumers who are no longer passive recipients of the state use of imagery. They are becoming increasingly vocal, active, and discerning in their taste for media products. In short, buyer power has significantly expanded while seller power, previously concentrated in the hands of a few, is seeing new challengers in the marketplace.

The Hollywood-China Story

11 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press.

5 The era of the one-way relationship between the state and the media has officially ended. In this paper, I argue that the arrival of Hollywood competition has contributed to the expansion of the marketplace for media products. Furthermore, the expansion was a result of a rational decision-making process initiated by the state to allow for more competition within the film industry in a strategic nationwide effort to move the economy away from an investment and export-driven model to one based on domestic consumption and innovation. As part of its 12th Five Year Plan (2011-2015), China wants the “cultural sector,” which includes the film and entertainment industry, to become a more robust economic growth engine for the economy12.

The market for loyalties model is one way to examine the relationship between the media and the state. It's the idea that different media spaces represent different battlegrounds between public and private actors who all have an interest, as an exercise of sovereignty, in the construction of a national identity, a stake in shaping a set of political views and cultural attitudes. National identity in China is oftentimes a product that is explicitly manufactured and distributed in the marketplace through many mediums, one of which is film. At the height of the Cultural Revolution, from 1963 to

1969, when Mao Zedong’s wife, Jiang Qing, single-handedly ran the Ministry of Culture, zero films were made. In that entire decade, only eight films, all propaganda films, under the supervision of Jiang Qing, were produced and distributed13. Film and the arts in general were relegated to an inferior position; they became an arm of the party that existed to achieve political ends. Studios only produced films to deliver the message of

12 Ernst and Young. “Spotlight on China: Building a Roadmap for Success in Media and Entertainment.” Summary Report 2012. 13 Producer, Chiao, Peggy, “Entering the Golden Era of Chinese Language Cinema.” Fairbank Center Lecture, November 8, 2012.

6 the party. They were not commercial entities but rather Party mouthpieces, serving the function of propaganda machines.

Today, the studios have come a long way from their propagandist modern roots to becoming full-blown commercial enterprises. Small, privately run studios compete with large, vertically integrated studio conglomerates for box-office space, talent, financing, and technologies. The Party has not vanished into the background either. It still acts as the overseer and gatekeeper of all things cultural. Every filmmaker needs to submit the screenplay for state approval before securing financing and signing distribution agreements. The state retains the authority to give its ultimate seal of endorsement – the so-called “dragon seal14” – before the film can officially be released in a Chinese cinema. Without its blessings, films can only survive at the margins or occasionally grace their presence on the international film festival circuit.

For foreign players seeking a piece of the domestic film market, Chinese authorities have long cast a wary and suspicious eye to all things foreign made, especially in the cultural realm. Until recently, China Film Group Corporation, the single most powerful player in the Chinese film industry – also the largest state-run film enterprise – maintained a monopolistic stranglehold on the import and distribution of foreign films.

For China’s leaders, the message has always been far more important than the market, and they have exhausted every effort to control the mediums through which that message can be disseminated. Why? Because it’s the message that shapes views,

14 Jaffe, Gabrielle. December 9, 2012. “China’s Indie Filmmakers and the Way of the Dragon Seal,” http://www.latimes.com/entertainment/movies/moviesnow/la-ca-mn-china-indie-films- 20121209,0,7228298.story

7 norms, and attitudes, all of which contribute to the construction of a national identity. By controlling the message and the mediums, one monopolizes control over the shaping of national identity and by extension the formation of loyalties15.

In the film industry, power players compete for influence and control over a set of images and representations that can fundamentally shape a set of identities. The seller, in this case, is the government and vertically integrated media conglomerates, and most recently Hollywood juggernauts; buyers are the citizens; product is a set of identities propagated through cinema, and market currency is loyalty or citizenship, hence the name "market for loyalties.” One is literally competing for loyalties, and in China’s case,

Hollywood has officially arrived on the competition scene.

Hollywood did not arrive by accident; they did not serendipitously stumble upon the Chinese consumer by flooding the market with its latest animation of Kung Fu

Panda. They were invited in by Chinese authorities, not China Film Group, who welcomed them with open arms to make joint-venture investments and technology transfers to China. When then leader-in-waiting, Vice President Xi Jinping, paid a

Valentine’s Day visit to Los Angeles, he diplomatically courted big Hollywood studios with two landmark deals: a deal allowing American studio films greater access to

China’s booming movie market, and approval of a joint-venture studio between

DreamWorks Animation and three Chinese media companies. Furthermore, Xi agreed to allow 14 US-made 3D and large-format films enter China on top of the 20 allowed under the previous quota bringing the combined total to 34 films16. In addition,

15 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press. 16 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012.

8 Hollywood imports would be allowed to recoup 25% of the returns from box-office receipts as opposed to 17.5% under the old agreement.

The two developments represent a true milestone in the history of Hollywood’s relationship with China, best characterized as a bumpy roller-coaster ride. For a bit of context, rewind to 2001, when China was seeking official membership to the World

Trade Organization (WTO). Two lead trade negotiators, one from the US and one from

China, once remarked that in the run-up to China's accession to the WTO, it wasn't the terms relating to manufacturing machinery or high tech components that became the greatest sticking point between Beijing and Washington — it was how many Hollywood movies would be allowed into China each year17. Why? Because movies sell an image of the way we live, who we are, and what we bring to the world. Movies are America's greatest selling asset.

Back in 2001, China in an effort to maintain its monopoly control over the construction of Chinese national identity had attempted to thwart Hollywood’s unfettered access to its domestic market, and succeeded. A little over a decade later, authorities are welcoming more Hollywood presence in China, though under strict conditions, this time in an effort to boost its modest consumption-driven economy.

The two developments served as a reality check to China Film Group who up until now was the sole importer of foreign films in China. Under the new deal, any enterprise will be “eligible to apply for and be granted a license to distribute imported

17 Landreth, Jonathan. October 29, 2012. “Ahead of Film Summit, Here’s Everything You Need to Know about China’s Movie Industry.” http://asiasociety.org/blog/asia/ahead-film-summit-heres-everything-you- need-know-about-chinas-movie- industry?utm_campaign=socialmedia&utm_source=facebook&utm_medium=socialmedia

9 films.” Moreover, the establishment of Oriental DreamWorks, backed by Shanghai

Media Group – China Film’s closest competitor – is a reminder of renewed competition for China Film. The monopoly importer of Hollywood films has finally lost its iron grip, at the orders of the state and urgings of its leaders.

Expansion of the Cartel

Who, other than China Film Group — long the monopoly importer of Hollywood films — will now be allowed to distribute imported films? A number of market-savvy competitors have emerged onto the scene. In May of this year, real estate giant Dalian Wanda

Group, owner of China’s largest cinema circuit, paid US$2.6 billion to purchase AMC making it the largest cinema operator in the world18. Industry insiders now expect

Wanda to boost its position vis-à-vis China Film by starting its own film production unit, which would put it in a position to directly compete with China Film.

Other private players hoping to swallow a larger slice of the pie include Huayi

Brothers Media Corp, the first Chinese film studio to list shares publicly, and Bona Film

Group, China’s only US-listed film studio who recently struck a deal with Fox

International Productions to develop, produce, and distribute films throughout China19.

Another contender is Le Vision Pictures, distributor of successful imports such as

18 Landreth, Jonathan. October 29, 2012. “Ahead of Film Summit, Here’s Everything You Need to Know about China’s Movie Industry.” http://asiasociety.org/blog/asia/ahead-film-summit-heres-everything-you- need-know-about-chinas-movie- industry?utm_campaign=socialmedia&utm_source=facebook&utm_medium=socialmedia 19 Szalai, Georg. October 26, 2012. “China Bona Film, Fox International Strike Multi-Picture Deal.” http://www.hollywoodreporter.com/news/fox-international-bona-film-china-multi-picture-deal-400181

10 Expendables. One can expect further competition coming from DreamWorks’ new

Chinese joint venture in Shanghai once it is off the ground.

Out of all the would-be contenders, Wanda appears to be the most likely candidate by having enough economic and political clout to warrant government approval in granting it an official license to compete with China Film and its sister company Huaxia Film Distribution, the second largest distributor in China. In May,

Wanda CEO Wang Jianlin said that for “market fairness” his company had applied for such a license and should be granted one. The new agreements announced publicly in

February, if properly implemented, should work in favor of Wanda. The language clearly states that the licensing of distributors will be conducted in a “non-discriminatory manner.” Still, as of today, the State Administration of Radio, Film, and Television

(SARFT) had not responded to Wanda’s application20.

Wanda’s high profile in the cultural industry is impressive. With $12.8 billion in annual revenue, the conglomerate started as a property company and is now one of the most powerful players in the industry. Commercial property contributed over 90% of its annual revenue in 2011, and by the end of last year, it had already exceeded its target revenue while claiming ownership of 35 new Wanda Plazas featuring shopping malls and cinemas all within two years21.

The ultimate price for the company though is not in land but in films. Since 2005, it has invested in the cultural industry beginning with the construction of cinemas. When

Wanda entered the film industry in 2005, total box office revenue in China was only

20 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012. 21 Wei, Liu. 3 January 2013. “Wanda Group ventures onto the Global Stage.” http://www.chinadaily.com.cn/china/2013-01/03/content_16076653.htm

11 around RMB 800 million, but in 2011, that figure rose to RMB 13 billion nationwide. By the end of 2012, the number had grown to RMB 14.3 billion. Wanda Cinema Line, which owns 1,000 screens in China, holds a market share of 15 percent22.

Furthermore, the company’s CEO believes that a critical test for Wanda’s future development of its cultural business will be whether it can produce quality content.

Industry observers say it may still be too early to tell how successful Wanda will be in this regard, but it certainly already has the sales, marketing, and exhibition talent within the firm. In short, a company like Wanda, which has won government endorsements in the past for its building prowess, is discontent with its mostly downstream business. Just like any other big corporation, it is hungry for the opportunity to grow and expand upstream, first into distribution and eventually into content production, all of which means state-run media enterprises will begin to see more competition from the private sector in the near future.

While the official verdict on Wanda is still out, other players outside the studio system has successfully entered the distribution market. A Beijing-based advertising company, called DMG Entertainment, announced in April that it would join forces with

Walt Disney subsidiary, Marvel Entertainment, to co-produce the superhero action film

Iron Man 3, bringing the location scouting team and production crew to shoot in China.

Most notably, Disney, Marvel, and DMG presented the project as a co- production, meaning that the film will be able to legally circumvent quota regulations. At the moment, there is no iron-clad formula by which China grants official co-production status, though having Chinese actors, language and scenes are important factors, as is

22 Wei, Liu. 3 January 2013. “Wanda Group ventures onto the Global Stage.” http://www.chinadaily.com.cn/china/2013-01/03/content_16076653.htm

12 the amount of financial investment from the Chinese partner’s side – the rule of thumb being one-third Chinese financing. In recent months, authorities from SARFT have increasingly voiced displeasure that some foreign filmmakers are including only token

Chinese elements in their movies while seeking to win co-production status.

Still, more Hollywood-China co-productions are expected to flood the market, as it appears to be the most obvious way to game the system23. Studios taking advantage of the regulatory ambiguities surrounding co-productions run the risk of being subjected to the whims of SARFT authorities when seeking status approval, but at the same time they face a very attractive upside – the possibility of reaping a 39% return from box office receipts instead of 25%.

While many studios are looking to the recent example of Looper, a touted co- production between a US company, Endgame Entertainment, and a Chinese partner,

DMG Entertainment, industry insiders revealed that the film in the end was not admitted as a co-production by SARFT24. The film featured one Chinese actress and several scenes shot in Shanghai. Most of those scenes, however, only made it into the Chinese version of the film, as the scenes didn’t test well with US viewers and so were cut from the Western release25. Legally speaking, Looper only qualifies as a co-production, if one applies a very narrow interpretation of the co-production law. But in this case, DMG brokered the deal by leveraging its tight-knit relationship with China Film and SARFT authorities. Looper was able to reap the many benefits of a co-production without legally

23 Harris, Dan. Personal Interview. January 3, 2013 24 Cain, Robert. Personal Interview. 18 December 2012 25 China Hearsay. “Gaming the System: A New Breed of Sino-Foreign Film Co-productions.” September 27, 2012. http://www.chinahearsay.com/gaming-the-system-a-new-breed-of-sino-foreign-film-co- productions/

13 qualifying as one. The lesson here is that the successful marriage of Hollywood’s profiteering interests with Chinese state interests may require studios to cozy up and even kowtow to the state, DMG being the latest example.

DMG has adeptly navigated the Chinese regulatory maze while shoring up the confidence of big Hollywood studios. Its latest film, Looper, was a box office hit opening the same day in China as it did in the US. DMG also has a very intimate relationship with the Chinese film authorities. It has learned from years of doing business in China that the most foolproof method to avoid mistakes is to placate the powerful regulators who can make or break projects, in this case the China Film Group. DMG courted the state giant by co-producing its 2009 propaganda film, The Founding of a Republic, and bringing in commercial sponsors. The regulators have since returned the favor by allowing DMG to import and distribute other films such as Twilight and Resident Evil 426.

“Our relationship with them is extremely, extremely tight,” boasts founder and

CEO of DMG, Dan Mintz. “Tighter than pretty much anyone else27.” Mintz has even accompanied China Film Group executives on buying trips to Los Angeles, according to industry sources. In China, such back scratching is all part of a vast patron-client network of relationship building. Emboldened by its recent track record, Mintz foresees growth in the cinema operations business and seeks to expand DMG’s footprint in owning movie houses in China thereby placing it in direct competition with cinema giants like Wanda. DMG has already begun building branded cinemas in malls in cities

26 Montlake, Simon. November 2, 2012. “Hollywood’s Secret Weapon to Combat Piracy in China.” http://www.forbes.com/sites/simonmontlake/2012/11/02/hollywoods-secret-weapon-to-combat-piracy-in- china/2/ 27 Montlake, Simon. November 2, 2012. “Hollywood’s Secret Weapon to Combat Piracy in China.” http://www.forbes.com/sites/simonmontlake/2012/11/02/hollywoods-secret-weapon-to-combat-piracy-in- china/2/

14 like Beijing, Shenzhen, and Nanjing. In short, while DMG can be described as a would- be contender to fill the distribution gap left by recent relaxation of China Film’s monopoly grip on power, what it really offers is an alternative way forward. Its success story has depended inextricably on the successful rise of its patron, the China Film

Group, without which it would not have gained exclusive access to the sweetheart deals upon which it has built its name and reputation.

Most recent media speculations surrounding DMG’s latest project, Iron Man 3, about whether the film will get official co-production approval from SARFT for its spring release in China presents yet another example of this enduring lesson – that it’s better to work with the state than against it.

In late 2012, Disney, Marvel, and DMG were faced with the decision of whether to comply with the ill-defined SARFT co-production guidelines or to forego some of the benefits of official co-production status and instead optimize the film for worldwide distribution. They ultimately decided on the latter approach, making the film less censorship-friendly and more broadly aimed at the global market. Although they still shot scenes in China with notable local actors, the overall creative and business approach meant that the film could not adhere to the full set of co-production rules, i.e. one-third of major actors must be Chinese nationals.

Still, by working closely with the Chinese authorities, the co-producing partners have already secured many of the benefits that would have come with co-production status anyway28. According to industry insiders, Iron Man 3 will almost certainly enjoy a rare day-and-date release (as was the case in Looper), and perhaps even a pre-US

28 Cain, Robert. China Film Biz. http://chinafilmbiz.com/

15 release date. Rumors on China’s movie blogs and chat forums have speculated that the film will be released in China in April, before its May 3rd US debut. Moreover, the

Chinese government has allowed the parties to promote the film since April 2012, compared to most US imports that only get a two to three week marketing window prior to theatrical release. Finally, Iron Man 3 has enjoyed exclusive media access in China, at a level unparalleled for Hollywood imports, usually only reserved for high-profile local films. This has included various web and digital promotional activities, uncensored leaks of photos and news items on the national press circuit, and an unprecedented promotional teaser on the most publicized TV program of the year – CCTV’s annual

Chinese New Year Gala29.

In a further showing of goodwill, or kowtowing to the state, DMG planned a special segment during the New Year Gala program by presenting the “Iron Man Hero

Award” to a young Chinese boy who committed a heroic act worthy of Iron Man’s – and

Mao’s – approval. The semblance of the accolade, reminiscent of the annual model worker awards presented by the Communist Party to its most loyal followers, provides further evidence of DMG’s smart PR tactics aimed to garner state approval and ratification of its official card-carrying status as a member of the cartel of imagery.

Insider sources reveal that DMG, Marvel, and Disney are currently planning a worldwide premiere of the film in Beijing, something that has rarely been done before for a major

US studio30.

29 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 30 Cain, Robert. Cain, Robert. Daily Digest for March 8, 2013: Will Iron Man 3 gets China Co-Pro Status, and Does it Really Matter? Most of the Co-Pro Benefits Have Come Already.

16 With ever more American films on their way, many Chinese filmmakers are feeling the pressure of marketplace competition largely driven by Hollywood. New foreign competition inevitably brings in new voices, but those new voices are more likely to uphold the status quo rather than to challenge existing power structures. According to

Monroe Price, those in charge of the cartel of loyalties would want to find devices to place the power of destabilizing images in what are deemed safe hands31 – in this case,

Hollywood’s hands which are largely unthreatening to the ruling regime.

As former Hollywood Reporter and ChinaFile managing editor, Jonathan

Landreth, has noted, “The decision to allow more Hollywood blockbusters into Chinese cinemas is unlikely to herald a relaxation of propaganda controls. But it does suggest that leaders are willing to countenance more competition32.”

The market for loyalties framework explains how as large-scale players compete for power and influence in a shuffle for allegiances, the state will use the regulation of communication to organize a cartel of imagery and identity among themselves. The

Chinese government oversees the mechanism that allows the cartel to operate and is part of the cartel itself. In this case, pressures of globalization and China’s growing integration into the global economy have directly led to changes in domestic media laws and structures, outlined in the two developments above.

31 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press. 32 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012.

17 For the rules of the game to change, two conditions outlined by Price’s market for loyalties model both apply here33. First, existing domestic laws are inadequate at protecting the cartel. Government realizes that without enacting new laws to catalyze the transition to a consumption-led growth economy, its days in power are numbered, as its ability to deliver promises in accordance with the social contract may be severely constrained in the coming years. Secondly, national identity is changing or has changed and new legislation is necessary to be more inclusive to new players. Citizens have largely spoken by “voting with their feet” at the box office; year-on-year revenue growth for Hollywood has been phenomenal compared to the mediocre performance of domestic films. In the box office space at least, Hollywood has succeeded where China has failed, in winning over the hearts and minds of the public.

Beijing must recognize that it may be high time to expand the cartel to include new players. According to Price, in response to new entrants that could be threats to the control of the ancient regime, it can either redefine the cartel and accommodate new entrants or take effective steps to try to raise the barriers to entry34. In this case,

Chinese leaders have opted for the accommodation route. Given the existence of competing entities, leaders are forced to enlarge the membership of the cartel to include outside players.

New Opening, New Imagery

33 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press. 34 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press.

18 The arrival of Hollywood films has contributed to the expansion of voices in the Chinese media landscape. China exemplifies a system that has been tightly ordered from the center with state control of access to images, state-determined language of the media, and state-subsidized emblems of unity, all of which are due to make way for more decentralized methods. Co-opting Hollywood studios by encouraging more studio releases in China illustrates a case in point.

The lure of Hollywood emanates from the lure of its storytelling conventions depicting fantastical characters previously unseen and unheard of by the Chinese audience. Owing to the vast censorship regime that has left an extensive list of topics and genres off limits, Hollywood can still bring fresh offerings of characters and themes that in other markets have already lost their novelty and innovative appeal.

Thanks to Hollywood imports and co-productions, new themes have emerged on the screen that would have otherwise been forbidden under the purview of the cultural gatekeepers. For example, a time-travel film like Looper could never have been made in

China, for the time-travel theme would not have earned permission from SARFT officials. While time travel ranks among the most popular themes in Western science fiction, with hit Hollywood films The Terminator (1984), Back to the Future (1985) and 12 Monkeys (1995) all serving as testament to American viewers’ love affair with the genre, a time travel ban exists for all made-in-China TV and film productions imposed by SARFT beginning in April 201135, despite the fact that Chinese fiction has historically been a breeding ground for time travel tales, and it remains a very popular genre with young and old consumers alike.

35 Zihan, Zhang (Global Times). October 15, 2012. “Looper: Hasta la Vista, Maybe?” http://english.peopledaily.com.cn/90782/7977274.html

19 Professor Wu Yan, a science fiction writer and tutor at Beijing Normal University observed, “Traveling back in time allows authors to tap into an already available scenario rich in real-life figures, which appeals to history lovers. Exploring an unpredictable future, on the other hand, is somewhat risky.” With popular films like

Looper and Inception now dominating the time-travelled imagination of Chinese cinemagoers, one wonders why such a popular genre would still be banned in China.

"Depicting a future society also requires anticipating changes in social structures, which forces writers to confront politics. This part is troublesome," Professor Wu added36.

Wang Yao, a Beijing-based science fiction writer, said an important part of time travel stories is placing characters in historical events that have the potential to change the course of history, an element that barely exists in Chinese time travel stories. But thanks to the arrival of co-productions and cheap, mobile, piracy technologies, Chinese viewers now have exposure to this beloved genre both on the big screen and the computer screen.

Similarly, the widely popular Kung Fu Panda series also would have gone unnoticed by most production studios. A story known to industry insiders goes like this:

DreamWorks asked a senior member of China’s media regulator, “Would SARFT have approved an animated film about a slovenly panda, which likes noodles much more than exercise, becomes a Kung Fu master and has a goose for a father?” The SARFT official thought for a moment and said, “Absolutely not37.” But as a result of the

36 Zihan, Zhang. October 14, 2012. “Looper: Hasta la Vista, Maybe?” http://www.globaltimes.cn/content/738191.shtml 37 Landreth, Jonathan. November 4, 2012. “Will China Finally Open Up to Hollywood?” http://www.salon.com/2012/11/04/will_china_finally_open_up_to_hollywood/singleton/

20 popularity of the first and second installments guided by the vision of DreamWorks and under the new co-production scheme, overseen by Chinese officials, China will be producing the next installment of Kung Fu Panda with Hollywood’s support.

The potential seems to be unlimited as far as the Chinese appetite for new things is concerned. For example, there is no existing record of a Chinese monster movie much to the dismay of Godzilla fans. The genre has never survived past censors because a monster-centered movie inevitably requires a cameo showcasing destruction of a modern city, where famous landmarks get smashed with “villains” wreaking havoc on modern life. That sort of imagery would never be allowed for dissemination in China, especially through the film medium. As a result, the entire Godzilla/superhero genre remains utterly untouchable in China, for the very notion of superhero implies that some aspect of the existing state and police apparatus is ineffective, corrupt, or both38. With the co-production scheme, however, a Chinese Godzilla film has the possibility of coming to fruition, as long as it thoughtfully incorporates Chinese financing, location, and characters in its creative process.

In short, some parts of the censorship regime are clearly opening up to make room for new actors and decision-makers, while other parts remain off limits. The government, for one, seems to be encouraging more competition much to the chagrin of one of its own entities, namely China Film Group. Xi Jinping’s announcement in

February came as a shock to many officials at SARFT and China Film, who had no idea that this was coming. Insiders say the deals were drafted in English and were not

38 Sinica Podcast. “Hollywood Comes to China.” September 21, 2012.

21 translated for days further delaying official notification at home39. Now that the floodgates have officially been pried open, some industry watchers are hopeful that

President Xi will lead a campaign to completely privatize the movie business. This is wishful thinking, and the naivety must be exposed.

For one, Xi’s announcement comes on the heels of an economic slowdown at home. Chinese leaders for many years have not heeded the admonition of its economic advisors about the looming dangers of a development model overly dependent on exports and capital investment. Since the party’s legitimacy at home hinges upon its ability to deliver superior economic performance, measured by high GDP growth rate, while ensuring middle-class income security, its leaders have recognized that the time has come to shift the focus of its economic development away from exports towards domestic consumption-led growth.

The current growth model is unsustainable and untenable even in the short to intermediate term. Many reports have emerged to show that exports and industry value added are experiencing a gradual decline since peaking out in 2006. With expectations of a prolonged phase of sluggish economic growth in the developed economies, exports as a percent of GDP will continue to decline. The same holds true for industry value added40. Therefore, export’s contribution to GDP growth will continue on its downward trajectory.

Moreover, China already faces overcapacity in the manufacturing sector. Adding further capacity will not benefit growth. Thus, while real estate giants like Wanda are

39 Landreth, Jonathan. Personal Interview. 1 December 2012. 40 Seeking Alpha. August 4, 2012. “Why China’s Growth Model is Not Sustainable.” http://seekingalpha.com/article/781381-why-china-s-growth-model-is-not-sustainable

22 certainly encouraged to build more state-of-the-art theaters attached to shopping malls, the government is also hedging its bet by opening up the playing field to Hollywood downstream, mainly in an effort to encourage box office growth and by extension, middle-class consumption. Chinese leaders recognize that sheer building prowess is not enough to maintain GDP growth at above 8%. Building infrastructure results in increased supply, but robust consumption patterns are still needed in order for demand to meet supply. In the current fiscal year, Chinese consumption as a percentage of GDP is still below 30%, a number that definitely has room to grow over time.

In search of a new economic model, China’s 12th Five-Year Plan is looking to move the Chinese economy from export- and investment-driven growth to more consumption-led growth41. By courting Hollywood, and making the domestic competitive landscape as attractive as possible to big studios, the Party is making the bet that increased movie imports will drive domestic movie consumption and thus further its goal of moving the economy away from exports to consumption-led growth. It’s a safe bet too considering Chinese cinemagoers much prefer Hollywood escapism to the kitchen-sink dramas released by domestic studios. Statistics show that eight out of the top ten best performing films at the box office during the first half of 2012 were from Hollywood42.

The number one spot was claimed by Titanic 3D, which grossed close to RMB1 billion setting a new box office record in China. Tian Jin, deputy director of SARFT, confirmed that since China agreed in February to import 14 additional foreign films each year, the

41 “Asia: Coming together for sound and sustainable development,” Industry Updates, 5 April 2012, via Factiva, © 2012 China Daily Information Co. 42 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012.

23 market share of Chinese-made films had dropped and now accounted for only 41.4 percent of ticket sales43.

The “cartel of imagery” once dominated by state-run film enterprises, namely

China Film Group and its sister company, Huaxia, is gradually opening up. New players have entered the scene including Disney, DreamWorks, and 21st Century Fox. Thanks to the two recent developments, which put the final stamp of approval on the open invitation to Hollywood, the competition for loyalties just got hotter. And all of this came about not due to Party leaders’ enlightened view of its authoritarian rule but from a greater economic mandate, namely to drive consumption from the bottom-up. This required thinking outside the box about competition within the creative industry, which leaders have identified as a “pillar industry” to boost economic growth at home and cultural influences abroad.

More Harm than Good?

The picture would not be complete without discussing the negative externalities.

Skeptics have raised concerns about the impact of Hollywood imports on the development of China’s own film industry. After all, if one really wants to drive domestic consumption, why not nurture the domestic cultural industry through subsidies and relaxation of censorship, so that it can compete effectively at home and in foreign markets? Unfortunately, this is a reflection of the very limits to the logic of a planned economy. What works in building infrastructure, which requires vast mobilization and

43 Reuters. November 12, 2012. “China says Hollywood Putting Pinch on Domestic Films.” http://dawn.com/2012/11/12/china-says-hollywood-putting-pinch-on-domestic-films/

24 harnessing of state resources, may not translate well into the cultural industry, which at its core requires a nimble model supporting freedom of expression and creative thinking.

As this New York Times article44 puts it, “Chinese officials want to impress the world with its (cultural) richness, but they also want to manage it as they have managed the economy, and this constant meddling leaves culture in a deeply uncomfortable place, suspended between genuine creativity and political correctness, between greatness and mediocrity.” This sentiment is shared by many within the directors’ community who view the censorship regime as an abominable remnant of the Cultural

Revolution propaganda regime. Most recently, director Feng Xiaogang, one of China’s most prolific directors – called China’s Spielberg by Newsweek – made a remark while accepting the honor of “Director of the Year” award at the China Film directors’ Guild calling the censorship process in China “a torment45.” Overcome with emotion, Feng openly spoke about censorship during the acceptance speech, and as soon as he did, the attendees in the ballroom let out a collective “whoa” before breaking into applause.

His exact words are highly critical of the censorship regime, blaming it for the lack of quality films coming out of China.

A lot of times when you receive the order [from the censors], it’s so ridiculous that

you don’t know whether to laugh or cry, especially when you know something is

good and you are forced to change it into something bad. Are Hollywood

44 Tatlow, Didi K. November 28, 2012. “State Meddling Stifles China’s Film Industry.” http://www.nytimes.com/2012/11/29/world/asia/29iht-letter29.html?_r=0&utm 45 Lu, Rachel. April 17, 2013. “China’s Spielberg Calls Out Censors During Awards Ceremony.” http://www.tealeafnation.com/2013/04/a-great-torment-chinas-spielberg-rails-against-film-censorship-in- emotional-speech/

25 directors tormented the same way? … To get approval, I have to cut my films in a

way that makes them bad. How did we all persist through it all? I think there is

only one reason — that this bunch of fools like us love filmmaking — are

entranced by filmmaking — too much46.

The video of Feng’s acceptance speech has gone viral on China’s social media. One post containing the video was retweeted more than 10,000 times on Sina Weibo.

These instances of directors speaking out appear to be more commonplace than one would expect. In June 2012, renowned Chinese director, Lu Chuan, publicly expressed frustration at the censorship system. “We need a fair, relaxed and comfortable environment to be creative, like Hollywood,” he said at a forum during the

Shanghai International Film Festival. “Their movies can have aliens attacking Los

Angeles, even flooding the White House. Film should not just be a propaganda tool.” He further cautions that censorship rules must be relaxed sooner and not later, especially with the advent of Hollywood films shown in China. Otherwise, the oppressive environment makes it difficult for domestic films to compete on the same playing field as

Hollywood imports.

Unfortunately, censorship at home will likely to continue unabated. Lu Chuan speaks for mainstream Chinese directors who see foreign competition as an encroachment on their territory. Even worse off are domestic independent filmmakers whose primary fear is that the arrival of Hollywood films will reduce even more the space in which they can work by limiting financing streams and leveraging new

46 Lu, Rachel. April 17, 2013. “China’s Spielberg Calls Out Censors During Awards Ceremony.” http://www.tealeafnation.com/2013/04/a-great-torment-chinas-spielberg-rails-against-film-censorship-in- emotional-speech/

26 technologies to further amplify the mainstream voice at the expense of truly independent ones. As Price astutely observed, “The entry of new and attractive commercial material provides powerful influences against which it may be difficult for competing national identities to emerge47.” The advent of Hollywood makes it even more difficult for domestic independent voices to compete. It may well be that those voices that truly represent an alternative national identity will be crowded out or pushed further onto the margins, out of sight, out of mind.

Furthermore, the influx of Hollywood films may inadvertently serve as an opportunity for the state to further legitimize its rule by exercising its draconian control over the cinema media space. Implicit, shared control with Hollywood allows the state to expand the market for loyalties while still maintaining control. Such control is sometimes implicit but can also be explicit in nature as well. It should be noted that Hollywood has not exercised much leverage in its engagements with Chinese film authorities, nor are they complaining much at the moment. “Consumer spending trumps all48” is the prevailing sentiment resonating within Hollywood studio corridors.

Undeterred by bureaucratic intransigencies and the vagaries of the censorship regime, Hollywood executives are making the same confident bet as the Chinese government – that the objective to keep the consumer economy growing is what’s keeping the well-oiled machine running, and what’s keeping the Hollywood and China relationship alive and healthy. Foreign pictures competing at the local Chinese multiplex

47 Price, Monroe. 2002. Chapter 2. Media and Sovereignty: The Global Information Revolution and its Challenges to State Power. Cambridge: MIT Press. 48 Vlessing, Etan. October 25, 2012. “Hollywood Blockbusters Battling Head-to-Head in China: a Trend?” http://www.hollywoodreporter.com/news/hollywood-blockbusters-battling-china-a-383073

27 are watched closely by the major Hollywood studios, given the growth potential of that fast-growing exhibition market. With the China Film Group setting same-day release dates of Hollywood blockbuster hits, like The Amazing Spiderman and The Dark Knight

Rises, in the world’s second-largest film market, the cannibalization issue illustrates just how little negotiating leverage major Hollywood studios have in China.

At the same time, Hollywood appears increasingly willing to comply with government directives, sometimes even before they’re issued, in order to gain access to the lucrative Chinese market and subsequently reap the benefits of box office revenue.

Hollywood studios are not shy about engaging in self-censorship to win over the trust and confidence of Chinese film authorities. Numerous examples illustrate Hollywood’s indefatigable willingness to bend to the authorities’ wishes at a moment’s notice. In

MGM’s remake of Red Dawn, it imagined Beijing "repossessing" an America that had defaulted on its debt49. However, this storyline was not deemed acceptable by Chinese authorities. When excerpts of the script leaked in 2010, they prompted the headline "US

Reshoots Cold War Movie to Demonize China" in the Beijing-based, highly nationalistic

Global Times50. Chinese buyers then informed MGM that distributing Red Dawn in

China would prove problematic so the studio decided to change the storyline. After all, how could a film that nearly went bankrupt just a year before forego this opportunity to appease Chinese investors? Unfortunately, the film had already been shot. Still, during

49 Yang, Jeff. November 24, 2012. “How Red Dawn Could’ve been Remade without the Xenophobia.” http://blogs.wsj.com/speakeasy/2012/11/24/how-red-dawn-could-have-been-remade-without-the- xenophobia/?utm 50 3 June 2010. “China’s press suggests Dan Bradley’s ‘Red Dawn’ remake expresses US fear of China.” http://www.nydailynews.com/entertainment/tv-movies/chinese-press-suggests-dan-bradley-red-dawn- remake-expresses-u-s-fear-china-article-1.178683

28 post-production, upward of $1 million was spent on digitally erasing Chinese flags and symbols and changing sequences and dialogue to transform the invaders into looking like North Koreans51.

With its 1.3 billion population and growing, China has become the second-largest overseas market for American films. Its increasingly avid cinemagoers can easily add

$50 million to a Hollywood movie's gross revenue, some outperforming in China compared to the US. In a recent report, Ernst & Young predicted that China's box office would overtake America's by 202052. The reality remains that this burgeoning goldmine continues to be guarded by a relentless, heavy-handed censorship apparatus. Back in the 1990s, Disney, Sony, and MGM saw their business in China suffer after releasing the movies Kundun, Seven Years in Tibet, and Red Corner, all of which were deemed too critical of the regime.

Nowadays, any potential transgressions are likely to be nipped in the bud. When censors objected to a bald Chinese pirate in Pirates of the Caribbean: At World's End, he was edited out of the film's Chinese version. Footage was also removed from Men in

Black 3 because unpleasant aliens had disguised themselves as Chinese restaurant workers. In the Chinese version of Skyfall, references to prostitution and corruption were removed or lost in translation. All mention of the torture inflicted on Javier

Bardem's villain when he was an MI6 agent in Hong Kong was carefully expunged.

Most recently, in a highly publicized turn of events, Quentin Tarantino’s first film officially released in China, Django Unchained, was pulled from the theaters minutes

51 Cox, David. 11 March 2013. “Why Hollywood Kowtows to China.” http://www.guardian.co.uk/film/filmblog/2013/mar/11/hollywood-kowtows-to-china 52 Fritz, Ben and John Horn. 16 March 2011. “Hollywood tries to stay on China’s good side.” http://www.latimes.com/entertainment/news/la-et-china-red-dawn-20110316,0,995726.story

29 into its first day of screening at theaters across the country. Its sudden disappearance prompted consternation even among some of the Chinese government’s staunchest defenders53. Hu Xijin, editor in chief of Global Times, a state-run newspaper known for its nationalistic posture, cast the abrupt suspension of the film as a “strange decision” made by government agencies full of nervous bureaucrats. “The harm that this action itself brings to politics far exceeds the harm that would have been caused by not censoring the ‘offensive scene,'” he wrote on his microblog54. What is unusual about this case is that the film had been pulled last minute from screens at the very last moment after undergoing a saturation advertising campaign nationwide that would not have been conducted if a movie’s future were in any doubt.

What motivated the film from being axed at the very last minute is open to speculation. SARFT explained only that the release was canceled for “technical reasons.” Much of the talk in China’s online film forums has centered on the film’s violence and nudity. The Chinese publication International Business Times noted in an article that even after the censors’ cuts, a couple of scenes remained in the distribution prints that must have been inadvertently overlooked55. One of those scenes is a long shot in which Jamie Foxx’s penis can be briefly but clearly seen. In the other Kerry

Washington’s nipple can be glimpsed.

What is notable from the Django event is the open, unfettered discussion surrounding the legitimacy and efficacy of the SARFT censorship system. Unlike the

US, China does not have a movie ratings system that would give viewers a chance in

53 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 54 Mullany, Gerry and Michael Cieply. April 11, 2013. “At 11th Hour, China’s Censors Bar ‘Django Unchained.’” http://www.nytimes.com/2013/04/12/business/media/django-unchained-pulled-from-chinas- theaters.html?pagewanted=all 55 http://cn.ibtimes.com/articles/25732/20130411/django-unchained.htm

30 advance to ascertain whether a film is too violent for children or teenagers. The Chinese system relies instead on the brute force of censorship. Movies either have scenes excised during the approval phase or are banned entirely56. The absence of a ratings system “means the movies on screen need to be suitable for kids — that issue has been debated for years,” said Henry Siling Li, a media specialist at the China Executive

Leadership Academy of Pudong, an elite school in the Shanghai area for training rising stars in the Chinese Communist Party. “We have to remove nudity and violence from movies as long as there is the possibility that children will be in a cinema when a movie is shown,” he said57.

A seasoned film observer speculated that “the sudden last-minute blocking of Django Unchained has a lot to do with the unwillingness of SARFT to see a ratings system getting further actively discussed, which is always a sensitive and inconvenient subject for them58.” Drug War, an action film has already raised consternation amongst the Chinese public regarding SARFT censorship prompting new demands for the launch of an official ratings system. With the upcoming Beijing International Film Festival, topics about films will predictably get even hotter. Thus, fearing recent events that may add fuel to fire, SARFT presciently blocked Django to avoid any further serious discussions surrounding movie ratings.

In a more extreme case, Cloud Atlas saw 40 minutes of its film snipped by the censors. A follow-up report in the Shanghai-based Dongfang Daily said expository

56 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 57 Mullany, Gerry and Michael Cieply. April 11, 2013. “At 11th Hour, China’s Censors Bar ‘Django Unchained.’” http://www.nytimes.com/2013/04/12/business/media/django-unchained-pulled-from-chinas- theaters.html?pagewanted=all 58 Cain, Robert. China Film Biz. http://chinafilmbiz.com/

31 sequences and “passionate love scenes” were cut from the film, while gory sequences depicting a character being shot in the head or another having his throat slit remained.

According to censorship experts, there are two strands to the Chinese censorship — prudishness and political sensitivities. The censoring of gay love scenes in Cloud Atlas falls into the first category while cuts to Skyfall are in the second, broadly defined as anything that portrays China or the Chinese in a negative light, such as shooting a

Chinese officer in uniform59.

Speaking to the Chinese press before the film’s premiere, the directors of Cloud

Atlas said they acknowledged the “constraints” of releasing the film in China, but they trusted the editing qualities of the film’s Chinese co-producers, Dreams of the Dragon

Pictures60. The company’s CEO told the Chinese press that the cut was conducted to adhere to the censorship regulations of SARFT. “Chinese audiences might want to see more of a popcorn movie, and considerations for the Chinese market were made in the making of the Chinese version of the film,” said the producer, who invested $10.5 million in the film, then bought the Chinese distribution rights for the film for another $3 million and stumped up another $5 million to take a 9 percent stake of the film’s revenue. When big money is at stake, this quote sums up the attitude and reasoning that have justified

Hollywood studios’ bowing to Chinese authorities.

In the case of Cloud Atlas, the scope of the censorship and the director’s willingness to accept the hefty cuts have surprised even longtime observers of the

59 ‘Cloud Atlas’ Makes Cuts to Satisfy China: http://abcnews.go.com/Entertainment/wireStory/cloud-atlas- cut-38-minutes-china-audience-18300041?page=2 60 Tsui, Clarence. 22 January 2013. “Chinese Censors Snip 40 Minutes Off ‘Cloud Atlas.” http://www.hollywoodreporter.com/news/chinese-censors-cut-cloud-atlas-414219

32 industry who admit that big Hollywood directors are usually the ones who don’t accept edits to their films61. An anonymous producer was quoted by the Los Angeles Times as complaining: "It's a clear-cut case – maybe the first I can think of in the history of

Hollywood – where a foreign country's censorship board deeply affects what we produce62." There have been complaints that both America and the rest of the world are being given a sanitized portrait of a repressive behemoth whose human rights transgressions, social injustices, and imperial ambitions are being conveniently swept under the rug.

However, in reality most directors have little to no say over which part of the content will make the final cut on the foreign screens and which parts will be edited out.

That is a decision largely left up to studio executives working in conjunction with their foreign distributor counterparts. As seen recently in the case of World War Z, executives at Paramount Pictures took the initiative to axe an scene that they think the Chinese authorities would find offensive.

In the offending scene, characters debate the geographic origin of an outbreak that caused a zombie apocalypse and point to China. Normally the detail would not have merited discussion at the top echelons of the studio. However, given the fast-rising prominence of the Chinese market, state censorship and the quotas for U.S. releases, the studio advised the movie producers to drop the reference to China and cite a

61 Tsui, Clarence. 22 January 2013. “Chinese Censors Snip 40 Minutes Off ‘Cloud Atlas.” http://www.hollywoodreporter.com/news/chinese-censors-cut-cloud-atlas-414219 62 Cox, David. 11 March 2013. “Why Hollywood Kowtows to China.” http://www.guardian.co.uk/film/filmblog/2013/mar/11/hollywood-kowtows-to-china

33 different country as a possible source of the pandemic63. The minor alteration to a $240 million dollar zombie film will go unnoticed by most viewers, but it speaks to the substantial influence China is wielding over American cinema.

Stanley Rosen, director of University of Southern California’s East Asian Studies

Center says it best, “The Chinese Communist Party wants to have a unified message.

They are getting better in terms of what subject matter is allowed to be shown, but worse in terms of remaining hyper-sensitive to anything that puts China in a bad light64.”

In the case of “World War Z,” Paramount didn’t wait for Chinese censors to view the film. Before screening it for anyone in China and negotiating for distribution, the executives recommended the change. Just the fact that China is the origin of a pandemic with the food safety problem and the SARS epidemic would be enough for the censorship authorities to reject the film.

Unsurprisingly, what's happened with World War Z and others – the notion of

Hollywood bending over backwards to comply with foreign censorship – isn't exactly unprecedented. During the WWI, Cecil B. DeMille made a film called The Cheat with a

Japanese villain. When the film was reissued in 1923, Japan had already become an

American ally. Without benefit of digital technology, the crafty oriental was quickly turned into a Burmese ivory king65.

63 Shaw, Lucas. April 1, 2013. “Fearing Chinese Censors, Paramount Changes ‘World War Z’” http://www.thewrap.com/movies/article/fearing-chinese-censors-paramount-changes-world-war-z- exclusive-83316?page=0,0&utm 64 Hiscock, John. April 8, 2013. “Hollywood Blockbusters are being cut for Chinese audiences.” http://www.telegraph.co.uk/culture/film/film-blog/9979471/Hollywood-blockbusters-are-being-cut-for- Chinese-audiences.html 65 Cox, David. 11 March 2013. “Why Hollywood Kowtows to China.” http://www.guardian.co.uk/film/filmblog/2013/mar/11/hollywood-kowtows-to-china

34 Hollywood now finds itself cheerleading for a new superpower in the Far East, even at a time when White House has not decided once and for all whether China will be a friend or a foe. For almost a century, Tinseltown upheld America's own soft power hegemony by selling the American way that then translated into growing ticket sales on the home front. Nowadays, economic success is winning communist China a piece of that pie. To some extent, it seems the turning tides are a reflection of capitalism’s market forces. The economic benefits of doing business in China far outweigh the costs.

Hollywood censoring of its own content is simply “good business” as far as the studios are concerned. According to Frank Couvares, an expert on censorship and the film industry, Hollywood’s practice of censoring movies for foreign audiences is business as usual. “It’s par for the course. This is nothing new,” he says66.

The question remains, however, whether there may be negative externalities – whether there are social costs currently unaccounted for in the market equilibrium. And if so, what can be done?

Taken to the extreme, the economic logic of consumption-driven growth may become an excuse for complicity. Censorship, after all, is a process of negotiation.

Speaking publicly about censorship does not necessarily require denouncing China.

Hollywood could, for instance, make it a standard best practice to carefully document and announce the cuts that the industry makes to cater to Chinese censors67. Doing this on an industry-wide basis would not single out any one filmmaker nor would it throw any

66 Couvares, Francis. 1996. Movie Censorship and American Culture. Washington and London: Smithsonian Institution Press. 67 Osnos, Evan. 20 February 2013. “Hollywood and China: Revenue and Responsibility.” http://www.newyorker.com/online/blogs/evanosnos/2013/02/hollywood-and-censorship-in-china-revenue- and-responsibility.html#ixzz2LeDIHTAy

35 one studio into the trenches. What it would require is industry-wide cooperation and more importantly, the self-recognition that filmmakers have an obligation not only to their investors for making profitable films but also to audiences worldwide for upholding authenticity and freedom of speech.

Outspoken critics of Hollywood’s collaboration with China’s film censors include not only foreign journalists68 and cinephiles but also homegrown directors. Zhang Yuan, an award-winning Chinese director, accuses US studios for being too willing to accept a system that restricts filmmakers69. For a slice of the lucrative box office pie, studios are agreeing to change plots and scripts sometime beyond reasonable means, as witnessed in the case of Cloud Atlas.

Moreover, Hollywood’s cooperation with the censors could undermine the fight for freedom by China’s own filmmakers. While China remains among a small number of countries, including North Korea and Iran, which still has a censorship system, the battle for censorship freedom and creative expression has been hard-won and inconclusive in many instances. While Hollywood can get away with making a few cuts, homegrown

Chinese films are struggling to reach mass audiences, especially the ones that touch upon the stark realities of modern Chinese society.

68 Osnos, Evan. 20 February 2013. “Hollywood and China: Revenue and Responsibility.” http://www.newyorker.com/online/blogs/evanosnos/2013/02/hollywood-and-censorship-in-china-revenue- and-responsibility.html#ixzz2LeDIHTAy 69 Walker, Angus. 22 February 2013. “Chinese film director criticizes Hollywood for turning a blind eye to censorship.” http://www.itv.com/news/2013-02-22/chinese-film-director-criticises-hollywood-for-turning-a- blind-eye-to-censorship/

36 As a commentator named Zhang Bingjian put it, “What would happen if every director and producer published the censorship process on Weibo from now on70?”

Hollywood and China could have a profitable new future together, but would this require

Hollywood to stand up to Chinese censors? Unfortunately, being the new kid on the block, Hollywood may still be more interested in placating the regime than defying it.

Keeping its eye on the prize underpins the reasoning behind the studios’ business as usual attitude.

Still, American directors might be surprised by the way Chinese fans have reacted to pushback against the censors. When award-winning Chinese director, Lou

Ye took it to the web to candidly discuss his experience with the gatekeepers at SARFT and explained his decision to post details of the film censorship process on Sina Weibo,

Chinese fans and filmmakers cheered him on. Lou explained in an interview that the first cut of his latest film, Mystery, received SARFT comments to trim down sex scenes and to re-edit a scene depicting the gruesome murder of a homeless man with a hammer71. Lou complied and received approval to show the film at the Cannes Film

Festival in May 2012. However, four months later and little over a month from the film’s official release date, SARFT informed Lou that the film needed further editing. An exasperated Lou responded by logging onto his Weibo account where he began to

70 Osnos, Evan. 20 February 2013. “Hollywood and China: Revenue and Responsibility.” http://www.newyorker.com/online/blogs/evanosnos/2013/02/hollywood-and-censorship-in-china-revenue- and-responsibility.html#ixzz2LeDIHTAy 71 Lu, Rachel. 27 September 2012. “Director Reveals Mystery of China’s Film Censorship System on Weibo.” http://www.tealeafnation.com/2012/09/director-reveals-mystery-of-chinas-film-censorship-system- on-weibo/?utm

37 tweet the details of the censorship process. Over twenty days from September 8 to 26,

Lou tweeted his negotiation process with SARFT. At one point, Lou wrote:

I’m waiting for an answer: Can the film be released on time without any changes,

yes or no? The answer is so simple but so difficult–[the process] makes me feel

disappointed and sad, but I also feel a sense of understanding and support.

China’s domestic film industry needs everyone to work together. I totally accept

the fact that I’m a director in the age of film censorship. I just want a dialogue

[with the authorities], and a dialogue is not a confrontation. There are no winners

and losers in a dialogue. There are no enemies.72

On September 25, Lou reported that a compromise had been reached on the murder scene, and the film will be released on time. However, in a gesture of defiance,

Lou announced that he would remove his name as the director of the film in the public release version.

Lou’s public defiance of censorship attracted broad support from other filmmakers, artists, and netizens in China. Another director named Zhang Jiangnan commented, “Every time I looked at my films after censorship, I thought about removing my name, but I can never be as resolute as Lou Ye. I keep a ‘director’s cut’ for myself to make me feel better. To tell the truth, it’s about getting used to eating [expletive]73…”

72 Lu, Rachel. 27 September 2012. “Director Reveals Mystery of China’s Film Censorship System on Weibo.” http://www.tealeafnation.com/2012/09/director-reveals-mystery-of-chinas-film-censorship-system- on-weibo/?utm 73 Lu, Rachel. 27 September 2012. “Director Reveals Mystery of China’s Film Censorship System on Weibo.” http://www.tealeafnation.com/2012/09/director-reveals-mystery-of-chinas-film-censorship-system- on-weibo/?utm

38 Another film critic named Han Haoyue commented, “Lou’s removal of his name as director is like holding a hunger strike on the street.” Almost all commenters applauded Lou for his courage, while many other netizens saw the possibilities that could result from making the censorship process transparent. One netizen tweeted, “It’s not just the film censorship system; in other areas too, our lack of resistance allows such an unreasonable system to continue to exist. We have to shoulder the responsibility to eliminate the system instead of finding excuses for our lack of resistance. Lou Ye, I support you. I love your movies.” Another netizen agreed, “If everyone in every industry keeps true to his principles, maybe there will be some changes in the end74.”

There are certainly reasons to be hopeful for changes to come, even without the full cooperation of Hollywood. As Chinese viewers frequent the theatres more often, they are becoming increasingly sensitive to and discerning of censorship. They are no longer a passive audience who willfully stands by and watches without protesting the injustices associated with freedom of speech and expression. Viewers of Skyfall took their grievances online, where awkward cuts by the censors prompted calls for a review of the film censorship system.

“Even these kinds of movies are getting censored, for what?” wrote Wei Xinhong,

Deputy Editor-in-Chief at Shanghai Literature and Art Publishing Bureau, on his Sina

74 Lu, Rachel. 27 September 2012. “Director Reveals Mystery of China’s Film Censorship System on Weibo.” http://www.tealeafnation.com/2012/09/director-reveals-mystery-of-chinas-film-censorship-system- on-weibo/?utm

39 Weibo, the Chinese version of Twitter. “What kind of ear do we live in today? Still want to control people’s minds75?”

Fans of Cloud Atlas also spoke out with viewers noting that the full 172-minute version can be easily downloaded online. The black market in China to some extent has provided the ideal platform for people to circumvent the censors, much to the benefit of

Hollywood studios and Chinese audiences. By the time most Hollywood films open in theaters, they've been out for so long that the pirated version has been available for months at the many neighborhood DVD shops dotting the country. In addition to the accessibility factor, another reason cinephiles turn to pirated versions is to avoid censors imposed by the ideologues of SARFT. Before Django was officially released and subsequently pulled from theaters, pirated DVD sales of the movie have been out for well over a month with completely uncut and uncensored versions76.

Even Hollywood directors find some comfort in this reality. Responding to a question about the dramatic cut on Cloud Atlas, "It sucks," director Lana Wachowski was quoted as saying in the Chinese press. "But I believe you can watch the full version online77.'' For many viewers, the black market, namely pirated DVDs and online streaming, has become the new channel of choice through which they can acquire unabridged and uncensored version of Hollywood movies before they hit the big screen.

75 ‘Cloud Atlas’ Makes Cuts to Satisfy China: http://abcnews.go.com/Entertainment/wireStory/cloud-atlas- cut-38-minutes-china-audience-18300041?page=2 76 Tsui, Clarence. April 8, 2013. “’Django Unchained’ to Open in China With Less Vivid Blood.” http://www.hollywoodreporter.com/news/django-unchained-open-china-vivid-435054 77 Demick, Barbara. 22 Feburary 2013. “The Oscars show, nominated films shortchanged in China.” http://www.latimes.com/entertainment/envelope/moviesnow/la-et-mn-oscars-china- 20130222,0,1954542.story?utm

40 Once the floodgates swing open, big ideas associated with “spiritual pollution” or

“cultural contamination” become hard to control even for the most tech-savvy and ironclad gatekeepers. This prompts the question: does the censorship regime still matter, or has it already been relegated to oblivion by its own citizens?

Chinese filmmakers have in recent years become very vocal in advocating a complete overhaul of the country’s stringent and overly ambiguous film censorship system. Speaking in Hong Kong at a cultural seminar, an independent filmmaker, Zhang

Yuan, criticized the current system for providing no distinct rules and age-classification criteria for directors to follow, calling it “ridiculous78.” Meanwhile, Bona Films CEO, Yu

Dong, called for urgent reforms of China’s censorship system in a keynote speech delivered at a Screen Singapore event. To great fanfare in the foreign press, his comments mark the first time in modern history when an established figure in the

Chinese film industry has voiced his displeasure about the country’s draconian media regulation laws in a highly publicized event overseas79.

Yu’s remarks came on the heels of the criticisms of another veteran filmmaker,

Xie Fei, who In an open letter to SARFT two weeks prior said that the censorship system had “become a corrupt black spot for controlling the prosperity of the cultural and entertainment industry, killing artistic exploration and wasting administrative

78 Tsui, Clarence. 16 December 2012. “V for Vendetta Aired Uncut on Chinese State TV.” http://www.hollywoodreporter.com/news/v-vendetta-aired-uncut-chinese-403107 79 Tsui, Clarence. 8 January 2013. “Chinese Studio Boss Yu Dong Calls for Censorship Reform.” http://www.hollywoodreporter.com/news/chinese-stars-support-censorship-protests-409698

41 resources80.” In the letter, Xie questioned the Film Bureau, a branch under SARFT, as being arbitrary in its decisions to ban projects or to block releases.

Xie writes: “These years, when some films were [sent to the bureau] for filing and censorship, we would hear of requests which are not listed out in law, such as how

‘there shouldn’t be ghosts in modern stories’, ‘there should be no transit [through time]’,

‘extra-marital romance is not allowed’ or ‘certain political and historical incidents should not be written about’. This illustrates how the current censorship system is not practiced according to the rule of law, [but] the rule of man we have wanted to get rid of a long time ago81.”

In a timely reference to Mo Yan, who at the time had just won the Nobel Prize in

Literature, Xie continued: “Everyone should be equal in front of the law – and all forms of art should be equal as well… Imagine if the writer Mo Yan had to open a file and get permission before he is to write a novel, and then had to have his work read by 30 or 40 people from literary experts and people from departments representing workers, youngsters, women, the law enactment agencies, teachers and ethnic minorities – and for them to give opinions and make amendments to every paragraph and every word.

Do you think he would have won the Nobel Prize today82?”

80 Blanc, Sebastien. 18 January 2013. “China moviegoers show Hollywood the money.” http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/china- moviegoers-show-hollywood-the-money/article7534235/ 81 Lam, Oiwan. 21 December 2012. “Veteran Director Raises Curtain on China’s Arbitrary Film Censorship Policy.” http://globalvoicesonline.org/2012/12/21/veteran-director-raises-curtain-on-chinas- arbitrary-film-censorship-policy/ 82 Lam, Oiwan. 21 December 2012. “Veteran Director Raises Curtain on China’s Arbitrary Film Censorship Policy.” http://globalvoicesonline.org/2012/12/21/veteran-director-raises-curtain-on-chinas- arbitrary-film-censorship-policy/

42 The 70-year-old filmmaker went on to reveal how the authorities have failed to provide any feedback for a film he’s now consulting on, four months after the producers submitted it for censorship. According to official regulations, censors should notify filmmakers of their decision within 20 working days, Xie said, and the delay represents

“administrative inaction.” Xie said the project might have run afoul with officials due to its depictions of homosexuality as well as the appearance of Lin Biao, Mao Zedong’s heir- apparent until 1971. The director has since followed up his email by posting an article to

Weibo about international film classification systems and another about the history of banned Mainland Chinese films in the 1990s83.

Zhang Yuan, who spent years on an official blacklist in the mid-1990s for producing unsanctioned films and screening them at film festivals abroad, retweeted

Xie’s message and said in his own Weibo account today: “We hope this time all filmmakers can unite and fight for our future like warriors84!” Meanwhile, director, He

Ping, wrote in response to Zhang’s message: “Master Xie is already in his 70s and he has made some noise for the future of Chinese cinema, and for the creative space of a younger generation of filmmakers. He has examined film creators’ concerns from a constitutional level. As juniors, we salute him85.”

83 Lam, Oiwan. 21 December 2012. “Veteran Director Raises Curtain on China’s Arbitrary Film Censorship Policy.” http://globalvoicesonline.org/2012/12/21/veteran-director-raises-curtain-on-chinas- arbitrary-film-censorship-policy/ 84 Tsui, Clarence. 18 December 2012. “Chinese Directors Unite in Demand for Censorship Reform.” http://www.hollywoodreporter.com/news/chinese-directors-call-censorship-reform-403997?utm 85 Lam, Oiwan. 21 December 2012. “Veteran Director Raises Curtain on China’s Arbitrary Film Censorship Policy.” http://globalvoicesonline.org/2012/12/21/veteran-director-raises-curtain-on-chinas- arbitrary-film-censorship-policy/

43 Soon after, in another historic milestone, Chinese filmmakers indeed united in their calls for an overhaul of the film censorship system, with most calling for the establishment of the internationally common system of classifying films in accordance to their suitability for audiences of different ages. Prominent directors such as Zhang

Yuan, Wang Xiaoshuai, Gao Qunshu, He Ping, and Zhang Yang all spoke out on

Sina Weibo in support of Xie Fei’s letter86.

This surge of discontent among Chinese filmmakers following similar comments demanding reforms of censorship laws from industry figures like Yu Dong, CEO of

China’s biggest film distributor Bona Films, and Wang Jianlin87, China's second richest man and owner of Wanda Group, are evidence of the growing domestic pressure on the censorship regime to reform itself. However, it remains to be seen whether the filmmaker’s lobbying and posturing will result in any concrete action from SARFT.

In the meantime, one silver lining has been revealed – the lifting of the ban on

IMDB in China. The country’s cinephiles rejoiced on social media after regaining access to news and reviews of foreign films. News of Chinese netizens being able to access the website began to circulate in early March 2013, with some commenting on their ability to search for entries which have been previously denied screening licenses by

SARFT88. The timing coincided with the annual plenary sessions of China’s top-ranked political bodies, the Chinese People’s Political Consultative Conference and the

86 Tsui, Clarence. 18 December 2012. “Chinese Directors Unite in Demand for Censorship Reform.” http://www.hollywoodreporter.com/news/chinese-directors-call-censorship-reform-403997?utm 87 Brzeski, Patrick. 20 June 2012. “China Film Player Reveals Efforts to End Censorship.” http://www.hollywoodreporter.com/news/wang-jianlin-amc-wanda-china-censorship-340290 88 Tsui, Clarence. 14 March 2013. “China Lifts Ban on IMDB.” http://www.hollywoodreporter.com/news/china-lifts-ban-imdb-428534

44 National People’s Congress. The latter had just anointed Xi Jinping as the new Chinese president. The lifting of the ban may be yet another example of censorship authorities showing goodwill to its citizens, which leaves many netizens worried about how long this privilege will last.

Still, The unblocking of IMDb is the latest development in a year of positive signals from Chinese authorities over the regulation of the media, most likely due to the increased pressure from domestic actors and internal policy debates surrounding the changing-of-the-guard among the country's top leadership.

Pendulum Shifting: Rising Buyer’s Power in the Market for Loyalties

China only opened its market to Hollywood studios in 1994 in a last-resort attempt to save its own film industry, which had already reached its nadir89. It wasn’t out of admiration for Hollywood; people simply were not going to the movies any more. At the time, China only permitted 10 foreign movies to screen. The number was eventually increased to 20 before the most recent total of 34. Those additional 14 slots are all reserved for IMAX or 3D, which are all big-budget studio films slotted to bring in the big bucks for Hollywood and Chinese film distributors.

In those early years in the 90s, Hollywood returned to China at the behest of cash-starved Chinese studios that were lobbying hard for the right to distribute

Hollywood films as a stable way of generating profits90. Still, the privilege of distributing

89 Shaw, Lucas. April 1, 2013. “Fearing Chinese Censors, Paramount Changes ‘World War Z’” http://www.thewrap.com/movies/article/fearing-chinese-censors-paramount-changes-world-war-z- exclusive-83316?page=0,0&utm 90 Zhu, Ying. April 17, 2013. “Will China Unchain Django?” http://globalpublicsquare.blogs.cnn.com/2013/04/17/will-china-unchain-django/

45 imports was tied to studio performance, with studios producing quality domestic pictures awarded the right to distribute the big imports. The quota was one big import for one quality domestic film. Generally speaking, then as now, Chinese screeners were

Hollywood’s closest allies, while Chinese filmmakers would more often try to appeal to nationalist sentiment to build opposition to Hollywood imports.

But even as Chinese production companies and theater chains frequently find themselves at odds, a formidable force has emerged to challenge the role of the country’s policymakers and cultural elites, and this driving force will increasingly shape cinema trends and landscape of the Chinese film industry. This emerging force is no other than the rise of the Chinese audience.

While the Chinese state has largely adhered to a deep-rooted paternalistic management of culture and information, Chinese audiences are no longer passive recipients of the state’s “use of imagery” to control and assert sovereignty – they are increasingly active participants who demand that media be responsive to their needs.

As Ying Zhu puts it, “Media regulation in China is now a bargaining process in which the twin forces of state control and commercial imperatives must negotiate with each other91.” In the case of Avatar, Chinese theater chains triumphed in their battle to get the film on screens because they had the backing of audiences. She goes on to predict that the outlook for Django Unchained is promising, and it will likely be back in theaters soon. As studio boss Samuel Goldwyn once put it: “If the audiences don’t like a picture, they have a good reason. The public is never wrong92.”

91 Zhu, Ying. April 17, 2013. “Will China Unchain Django?” http://globalpublicsquare.blogs.cnn.com/2013/04/17/will-china-unchain-django/ 92 Zhu, Ying. April 17, 2013. “Will China Unchain Django?” http://globalpublicsquare.blogs.cnn.com/2013/04/17/will-china-unchain-django/

46 Moreover, two recent developments point to the sobering reality that audiences are increasingly voting with their feet at the box office leaving propaganda films behind as relics of a distant era. The golden age of propaganda imagery propped up during the

Cultural Revolution and ensconced in the memories of an entire generation is losing its political and emotional appeal. As Zhu states, “China’s overbearing government and censors will increasingly have to accept that audiences rule – and if it’s Hollywood they want, it’s Hollywood they will ultimately get93.”

First, there’s CCTV’s – government-controlled television network and Party mouthpiece – controversial decision to show an uncut version of V for Vendetta, in prime time, on its international movie channel. Unsurprisingly, the 2005 film had been banned in China for its advocacy of citizen revolutions against authoritarian rule but has been hugely popular in pirated DVD shops across the country. To the awe of many was the sight of the film’s anarchist delivering a televised speech about “censors and systems of surveillance coercing your conformity and soliciting your submission” on

CCTV-6. V for Vendetta was screened, with its lines dubbed in Chinese, on CCTV-6 with the channel’s official Weibo account running a message offering a synopsis of the film so that “film buffs could have some fun94.” This post was itself a breakthrough, as any information on the film had until then never appeared on officially-sanctioned internet search portals such as Douban or Baidu.

93 Zhu, Ying. April 17, 2013. “Will China Unchain Django?” http://globalpublicsquare.blogs.cnn.com/2013/04/17/will-china-unchain-django/ 94 Tsui, Clarence. 16 December 2012. “V for Vendetta Aired Uncut on Chinese State TV.” http://www.hollywoodreporter.com/news/v-vendetta-aired-uncut-chinese-403107

47 While unavailable in movie theaters, the film has long been available on pirated

DVDs and through online downloads. This is evident in the subsequent messages posted on Weibo, with bloggers quoting lines verbatim and pre-empting the film’s crucial scenes before they appeared on screen. While some complained about the film’s

Chinese title – read as “V Special Forces” rather than “V the Revenge Killing Squad”, the long-held translation of the film – most applauded the broadcaster’s courageous move. “It was a film closed off by all those blocked websites,” wrote blogger Xu

Cuofei. “It took me a long time to finally find it, and now I’m watching it off CCTV. Seems like there’s progress in society after all.” He was joined by another blogger, who said the official broadcasters “are going against the gods” in showing the film95. The film remained available on CCTV-6’s website for reruns after the initial screening.

Even mainstream and official media outlets made references to the screening, with Southern Daily running a report on its Weibo account, first quoting a line from the film – “People should not be afraid of their governments - governments should be afraid of their people” – before describing the surprise shown by netizens towards the sanctioned screening. Global Times, known for its frequent nationalistic editorials, also mentioned the screening in a comparatively neutral post96.

The CCTV screening of an uncensored cut of V for Vendetta on a Friday evening stunned many not only because of its theme, but also due to the fact that the titular

95 Tsui, Clarence. 16 December 2012. “V for Vendetta Aired Uncut on Chinese State TV.” http://www.hollywoodreporter.com/news/v-vendetta-aired-uncut-chinese-403107 96 Tsui, Clarence. 16 December 2012. “V for Vendetta Aired Uncut on Chinese State TV.” http://www.hollywoodreporter.com/news/v-vendetta-aired-uncut-chinese-403107

48 anarchist’s masked persona had been in recent years adopted by social activists in

Hong Kong and mainland China in anti-government protests. It is assumed that approval for screenings on CCTV-6 came directly from SARFT, which left many on the

Chinese blogosphere wondering whether this may pave the way to a more diverse and less restricted media landscape.

Furthermore, the appearance of V for Vendetta on state television was only the latest of a string of released films with content that in the past would have brought great discomfort to the Chinese ruling authorities. The Hong Kong film Cold War, which has secured USD 37 million in the mainland box office, revolves around the struggle between two assistant police commissioners aiming for the top job – a scenario that coincidentally mirrors the real-life factional drama threatening the transfer of power during the 18th National Congress of the Communist Party97.

Though energized by the recent turn of events, some filmmakers and industry figures are more wary about its long-term implications. An industry insider who has had experience working with Hollywood studios in China told me in an interview that sometimes even SARFT officials themselves do not know what these films mean or who they should be taking orders from98. This may well be a one-off event.

All pessimism aside, this important development points to larger ideological shifts happening inside the ruling administration at a time of general optimism towards the newly installed leadership. It may be a goodwill attempt to set the new leadership apart from the old one thereby capturing a small window of opportunity towards openness and

97 Tsui, Clarence. 16 December 2012. “V for Vendetta Aired Uncut on Chinese State TV.” http://www.hollywoodreporter.com/news/v-vendetta-aired-uncut-chinese-403107 98 Harris, Dan. Personal Interview. January 3, 2013.

49 creativity, Xi Jinping himself reportedly being a huge Hollywood film buff99. Moreover, the Vendetta screening comes at a time when official broadcasters are similarly caught in the waves of capitalism, seeking commercial profits from advertisers who are themselves driven by viewership numbers. In a coordinated effort to capture more viewers, by subverting their expectations and winning their admiration perhaps, the decision to screen Vendetta no longer seems like an enigma, but more so as part of a capitalist agenda.

A second development may be sounding off more alarm bells for the Party propaganda machine, as further evidence of empowered Chinese moviegoers “voting with their feet.” Screenings of Lei Feng, a biopic about a young Chinese revolutionary long canonized in propaganda discourse for his selfless contributions to the Communist

Party, were called off at cinemas in the cities of Nanjing and Xi’an because not a single ticket was sold. This cancellation, an embarrassment for the Party, came on the very day designated by the Party as "Lei Feng Day100."

Perhaps aware of the challenges of marketing Young Lei Feng and two other similarly themed productions (Lei Feng in 1959, Lei Feng’s Smile) to an increasingly propaganda-wary audience, SARFT subsequently issued a communiqué instructing party cadres to promote the films through organized group viewings and rural tours

99 Landreth, Jonathan. “Mandarins and Moguls.” China Economic Quarterly, Quarter 3, 2012. 100 Tsui, Clarence. 5 March 2013. “Chinese Cinemas Cancel Propaganda Film Screenings.” http://www.hollywoodreporter.com/news/chinese-cinemas-cancel-propaganda-film-426236?utm

50 while urging cinemas across the country to come up with proper publicity campaigns to stir public interest in the films101.

However, with the advent of the Internet and the emergence of a highly commercialized entertainment industry, young Chinese audiences have long distanced themselves away from propaganda imagery, which previous generations might have embraced out of either genuine naivety or a lack of alternatives. Even the authorities have become aware of the need to provide a more glamorous touch to some of their revolutionary style biopics, with the two films celebrating the 60th anniversary of the

People’s Republic (Founding of a Republic in 2009) and the 90th anniversary of the

Chinese Communist Party (Beginning of the Great Revival in 2011), more noted for its starry cast of Chinese A-listers than its central political message102. While each of the two anniversary films took over USD 64.3 million at the box office, imported Hollywood blockbusters and also domestic commercial fares largely overshadowed their performances, not to mention large swaths of tickets to these patriotic tickets were given away for free internally, rendering the official box office count less credible. Even then, the two films were ranked 23 and 24 in the country’s overall earnings standings, trailing even the likes of 2012 (at number 18 with USD 75 million) and Ice Age 4: Continental

Drift (number 20 with USD 73.6 million)103.

101 Bishop, Bill. 6 March 2013. “SARFT issues circular to ensure theaters show the three Lei Feng movies in release.” https://twitter.com/niubi/status/309449855875559424?utm 102 Tsui, Clarence. 5 March 2013. “Chinese Cinemas Cancel Propaganda Film Screenings.” http://www.hollywoodreporter.com/news/chinese-cinemas-cancel-propaganda-film-426236?utm 103 Tsui, Clarence. 5 March 2013. “Chinese Cinemas Cancel Propaganda Film Screenings.” http://www.hollywoodreporter.com/news/chinese-cinemas-cancel-propaganda-film-426236?utm

51 In the five decades since the arguably fictitious character of Lei Feng was widely adopted by the propaganda authorities, his glory is finally fading, with the public showing no interest in his story as depicted on screen. The relentless portrayal Lei Feng as the physical embodiment of Mao’s ideal cadre and a panacea for China’s social ills has fallen on deaf ears for those who have doubts about the party’s moral authority.

“The Chinese government no longer enjoys high credibility among people,” said

Zhang Ming, a political science professor at Renmin University in Beijing. “It begs the question: the government keeps bringing up the Lei Feng spirit and calling on people to be more helping to others, but what has the government done to follow the Lei Feng spirit104?”

At a time when China’s incoming president, Xi Jinping, has initiated a highly publicized campaign against corruption that cynics say is largely cosmetic, many wonder where the Lei Feng spirit has gone and whether Lei Feng, the people’s hero, should be buried once and for all. The box office disaster of the Lei Feng films appears to be the final nail in the coffin105.

The two developments together illustrate the inconvenient truth that the state propaganda machine is losing steam. But would this have happened anyway without

Hollywood’s intervention? What do Hollywood movies have to do with it anyway? While it’s hard to demonstrate a hard-proof causal relationship between the two, the direct

104 Levin, Dan. 11 March 2013. “In China, Cinematic Flops Suggest Fading of an Icon.” http://www.nytimes.com/2013/03/12/world/asia/in-china-unpopular-films-suggest-fading-of- icon.html?pagewanted=1&_r=3 105 Levin, Dan. 11 March 2013. “In China, Cinematic Flops Suggest Fading of an Icon.” http://www.nytimes.com/2013/03/12/world/asia/in-china-unpopular-films-suggest-fading-of- icon.html?pagewanted=1&_r=3

52 correlations are unmistakable. Hollywood introduced more competition at the box office for domestic films to countenance, and as a result the Chinese audience was introduced to a whole new set of cinematic imagery in storytelling. Even when tempered by the censorship regime, these images maintain enduring qualities that speak to the universal themes they represent – those of action heroes and villains and those of human failures and triumphs. Armed with the latest 3D technology and animation effects, Hollywood films have no doubt enriched the imagination of Chinese moviegoers by raising the standards for theater entertainment and the box office potential of homegrown theaters.

Most ironically, such developments are welcomed by the state with open arms.

The Party has shown no reservations in compromising the integrity of its own propaganda organ as a tradeoff for consumption-led growth at home. This further speaks to the heart of the dictator’s dilemma faced by the most populated authoritarian state in the world soon to overtake the US with the world’s largest economy: how to stay in power while not compromising economic growth. At least in the cultural realm, the state has grown more liberal overtime towards embracing the expanding market for loyalties and by extension an opening up of the cartel for imagery.

Conclusion

While the Chinese film market is rapidly growing with no signs of slowing down any time soon, the Hollywood share of the pie may not remain constant for long. In the first quarter of 2013, the cumulative grosses of US films in China are down by 22 percent,

53 while Chinese language films are up by 128 percent106. Overall, 2013 box office revenue is running more than 50 percent ahead of last year’s total, despite the lackluster performance of US films. This exemplifies the rising competition from domestic Chinese movies.

The rise of domestic films poses a significant challenge to future Hollywood imports. Considering Hollywood’s dismal performance at the box office so far, it is clear that the tastes of Chinese moviegoers have shifted decisively, though not permanently, toward local productions. As a result, American films in 2013 are performing at about the same level as they were back in 2010, when China’s market was roughly half the size as it is now107.

This turn of events comes at an unfortunate time for Hollywood. With box office revenue down by 13 percent in North America, the studios have been looking to

China to help fill the gap. That may not happen, at least not with any consistency. Sure, the next Avatar or Transformers or Iron Man movie will do fine in China, but the days of

$50 million grosses for movies like Battleship and John Carter are fading, as Chinese audiences become more discerning and would rather spend their money to see local stories with Chinese faces.

With North America flat at best, and limited prospects in the industry’s biggest international growth territory, one wonders how much patience the major media conglomerates have left for their film divisions. According to a recent Economist article, pre-tax profits at Hollywood movie studios fell by around 40% over the past five years,

106 Cain, Robert. China Film Biz. http://chinafilmbiz.com/ 107 Cain, Robert. China Film Biz. http://chinafilmbiz.com/

54 and they now account for less than 10% of their parent companies’ profits108. According to Benjamin Swinburne of Morgan Stanley, by 2020 the studios will contribute just 5% of the media conglomerates’ profits. In short, big studios can no longer afford to take a wait-and-see approach when it comes to China. They must enter now to gain a foothold in the world’s fastest growing film market.

A number of partnership deals have materialized already. In 2012, News Corp took a 19.9 percent stake in Bona Film Group, China’s largest private film group, which has a vertically integrated business spanning talent management, movie production, and exhibition109. DreamWorks Animation also announced a partnership in the same year with China Media Capital, Shanghai Media Group, and Shanghai Alliance

Investment to establish Oriental DreamWorks, which is investing $3.1 billion in an animation studio, entertainment complex, and theme park, called the Dream Center, in

Shanghai. The partners plan to co-produce Kung-Fun Panda 3 at the facility110.

Most recently, Paramount announced that it would be buddying up with two

Beijing-based businesses to produce the fourth installment of the blockbuster

Transformers franchise, one of which, China Movie Channel, is owned and operated by the SARFT. As part of the agreement, laid out in a press release, the Chinese firms will assist with "selection of filming sites within China, theatrical promotion and possible post-production activities in China, as well as casting of Chinese actors and

108 “Split Screens – A Tale of Two Tinseltowns.” February 23, 2013. http://www.economist.com/news/business/21572218-tale-two-tinseltowns-split-screens 109 Szalai, George and Clarence Tsui. April 17, 2013. “UK’s Pinewood Shepperton, China’s Seven Stars Ink Joint Venture Deal.” http://www.hollywoodreporter.com/news/pinewood-shepperton-chinas-seven- stars-440687 110 “Hollywood Courts Chinese Box Office Despite Cinema Censorship.” February 26, 2013. http://metro.co.uk/2013/02/26/hollywood-courts-chinese-box-office-despite-cinema-censorship-3513247/

55 actresses111.” Filmmaking, after all, is a business, and the business appears to be moving towards China.

In short, the “cartel” as spelled out in the market for loyalties framework has expanded. The state has chosen to embrace Hollywood studios by bringing it into the power structure. At present, Hollywood films do not pose as a destabilizing force to the ruling elite but rather a profit-making machine.

China may even have something to gain in the long run. Soon to be the world’s largest movie territory, it has major international soft power ambitions but currently lacks the ability to serve the global market. For a globally minded Chinese movie mogul, the first step would be to acquire a major US studio at a bargain price in order to gain international access. That dream may not be far off given the present malaise of

Hollywood film divisions. Wanda made waves in the press by acquiring AMC in 2012, but other cash-rich Chinese studios, both public and private, may be waiting out for bigger and better waves in the future, as they seek to move further upstream from international exhibition to distribution to production.

111 “Transformers 4 Heading for China.” April 3, 2013. http://www.bbc.co.uk/news/entertainment-arts- 22014995

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