"Linked Cities, Easy to Break: In this trade war, the Chinese film market cannot think that it can remain unscathed."

Trump has continuously increased tariffs, and the battlefield of the China-US trade war is still expanding.

On April 10th, a spokesperson for the National Film Bureau told the media, "The mistaken actions of the US government imposing excessive tariffs on China will inevitably further reduce domestic audiences' affection towards American films. We will moderately reduce the number of American films imported."

Does this mean that as a special product exported from the US to China—films—will join the toolbox of China's resistance against US tariff bullying? What kind of chain reactions will policy changes bring to cultural commodities like films, and how do industry insiders view it? In the face of the increasingly significant Chinese film market, which is also facing risks of shrinking box office and theaters, is it an anxiety and challenge, or an opportunity and new driving force for transformation?

Observer Network has had a dialogue with project manager of a film company and film critic Lian Cheng Yichuai regarding these issues.

[Interview/ New Trends of Fish Watching]

Observer Network: The spokesperson for the National Film Bureau responded to reporters' questions on April 10th, stating that due to the influence of the US government's excessive tariffs on China, "we will follow market rules and moderately reduce the number of American films imported." As an insider in the front lines of film distribution and a film critic, how do you view this message?

Lian Cheng Yichuai: Actually, before April 10th, there were experts in the public discourse predicting that there might be news about reducing or even banning the import of American films. As a practitioner, my first reaction was that I didn't want the Sino-US tariff war to affect the film sector. On one hand, because the film industry itself is in a very depressed state; on the other hand, I also feel that the proportion of the film industry in the overall Sino-US economic and trade relations is too small, and it seems unnecessary to touch it. Moreover, Hollywood is still the stronghold of Trump's opponents;

But then I thought, at present, there is definitely a state of "you die, I live" in the Sino-US confrontation over trade. Under such a large environment, any hope for a particular field not to be affected or any anxiety is actually meaningless. Individual industries must necessarily obey the national overall will. If the whole country loses this trade war, how can the film market remain unscathed?

Observer Network: A peculiarity of the film sector is that, as a strong cultural product, the Sino-US trade imbalance in the film sector is pure. Currently, approximately how much profit does the US make annually in the Chinese market in the field of introduced films?

Lian Cheng Yichuai: First, in the physical trade sector, China has a large surplus with the US, while in the service trade sector, China has always been in deficit with the US. The film industry is bound to be a card that the state uses to counteract the US, it’s just a matter of when it will be played. Although we are in deficit compared to the US in the film industry, and the US is profiting from the Chinese film market, it is relatively small compared to other fields overall.

In recent years, especially after the pandemic, the proportion of all imported films, including Hollywood films, in the entire Chinese film market has been relatively low, around 20%. Although Hollywood dominates the majority, if the overall proportion is around 20%, then Hollywood cannot gain much more.

Taking Hollywood films in recent years as an example, the total number of imported films from the US is around 40, of which the majority belong to blockbusters where Americans can share in the box office revenue, and a smaller portion are batch films, which means those purchased by the Chinese side in one-time buyouts.

In 2024, a total of 32 quota films (and 10 re-release films) were introduced into mainland China, of which 30 were from the US. The total box office revenue was 5.862 billion yuan, accounting for 13.79% of the annual box office. In 2024, a total of 60 batch films were introduced into mainland China (44 excluding Hong Kong and Macao, of which 7 were from the US), with a total box office revenue of 4.078 billion yuan (excluding Hong Kong and Macao: 3.113 billion yuan), accounting for 9.6% of the annual box office (excluding Hong Kong and Macao: 7.3%). Therefore, a total of 39 American films entered the Chinese cinema market in 2024, with a total box office revenue of 6.215 billion yuan, accounting for 14.62% of the annual box office.

Based on an annual box office revenue of 4 billion yuan, the total box office revenue of imported American films is likely to reach a scale of 8 to 10 billion yuan. According to the agreement, the distribution ratio for American films is approximately 25%, meaning that the US side can take up to 2.5 billion yuan. This year, it is unlikely to reach this number, and last year wasn’t particularly high either. In fact, if measured solely by box office revenue, the data for the past two years has hovered around 2 to 3 billion yuan.

The statement made by the National Film Administration still leaves room for maneuver, using "moderate reduction," and choosing according to the market. For example, whether highly anticipated films such as Mission Impossible 8, Zootopia 2, and Avatar 3 will ultimately be introduced is still uncertain and depends on the situation.

Therefore, personally, I think that the statement made by the National Film Administration is primarily to align with the overall situation of the Sino-US trade war, with a stronger symbolic significance. Second, I believe that an important reason is that although the film market is small, its influence is great, involving ideology and national soft power. It shows China's attitude.

Poster promotion for "Avatar 2" in Chinese cinemas

Taking examples of recent Hollywood films, the total number of imported films from the US is around 40, with the majority being blockbusters where Americans can share in the box office revenue, and a smaller portion being batch films, which are bought out by the Chinese side in one-time deals.

Source: Maoyan Research Institute, "2024 China Film Market Data Insights"

Source: Dida Professional Edition, "Observation | 2024 Hollywood Films in the Chinese Market"

Observer Network: Does this mean that the opportunities for Chinese audiences to see American films will decrease in the future?

Lian Cheng Yichuai: I don't think so. Trump's latest statement is to impose a 125% tariff only on China, and other countries have a grace period of 90 days. Now there is a popular saying that under this model, "the whole world will become China's Yangcheng Lake." In fact, transshipment trade can be done in the film sector. We can completely turn other countries into "Hollywood's Yangcheng Lake," because many films, such as Harry Potter, can be imported under the name of the UK, and Avatar can be imported under the name of New Zealand.

Although we are in a deficit in the film sector, even with transshipment imports, it still allows Americans to make money, but we can use a higher posture to negotiate with the five major Hollywood companies—do you want to earn China's money? Then it depends on your attitude. If you want to cooperate with China and maintain the Chinese market, do you need to express stronger dissatisfaction with Trump's policies?

Observer Network: In fact, policy adjustments do not mean an "internal circulation" of the film industry. We noticed that the National Film Administration mentioned in its statement that as the second largest film market in the world, we will "introduce excellent films from more countries in the world to meet market demand." To achieve this goal, what aspects do you think film practitioners need to strengthen?

Lian Cheng Yichuai: I repeatedly mentioned in my previous articles, "China is one of the most inclusive audiences in the world." In recent years, Thai films like "Grandma's Grandson" and Italian films like "Tomorrow Will Come" have achieved tens of millions or even hundreds of millions of RMB box office revenue in mainland China, which is quite impressive. These films are still in the early stages of market cultivation, although they haven't yet reached the scale of several hundred million or billions of box office revenue of Hollywood blockbusters, but at least there is room for development.

Thai film "Grandma's Grandson" uses delicate lenses to tell the story of a Chinese multi-child family with a preference for boys, intergenerational affection, and elder care issues, deeply resonating with Chinese audiences

Similar non-Hollywood films, non-English films, can also achieve fairly good box office results in the mainland market. Although in the short term, they certainly cannot fill the gap left by Hollywood films, I believe that film is just an ordinary field. Other fields in China, such as new energy vehicles, didn't they also come through hardships and eventually surpass others? Why should film be an exception?

To achieve this goal, we have a lot of work to do.

First, domestic film buyers, including China Film and Huaxia Pictures responsible for imports, as well as Maoyan and Dida providing data services, should all join forces to "mine gold" in different international film markets, including Europe, Southeast Asia, South America, etc.

Secondly, make good use of platform advantages, such as the upcoming Beijing International Film Festival and the Shanghai International Film Festival this summer, which themselves have many market sections aimed at promoting more copyright purchases and sales. Similar to the Cannes Film Festival, there will be many film buyers from China attending Cannes, and we can take a closer look at whether non-Hollywood and non-English films are suitable for the Chinese film market. We should broaden our horizons, starting with changing our fixed mindset, not believing that only Hollywood films can sell, while other films cannot sell. This idea needs to be abandoned first.

Closing ceremony of the 26th Shanghai International Film Festival, with the main competition jury亮相collectively

Thirdly, we should also actively study and think about why Hollywood films have become so strong and big. Besides cultural dominance, good marketing is also an important factor. In fact, if we could also show such determination and financial investment, at least in terms of creative planning, we could pay attention to non-English films, and when promoting domestically, if we could invest more creativity and ideas, package them to be particularly appealing, they would have great market potential.

For example, each Detective Conan movie theater version achieves high box office revenue in China, which is due to the long-term accumulation of this IP. The success of "Grandma's Grandson" is largely attributed to its promotional highlights—aligning with some common emotions between the two cultures. However, many films from non-English speaking countries and non-Hollywood films, although introduced, seem to have no voice at all, with a laissez-faire approach to promotion and planning, naturally making it difficult to achieve good results.

Observer Network: In short, we need to change our own concepts first, and there are many subjective initiatives that can be taken.

Yichuai Lian Cheng: Exactly.

Observer Network: The statement from the National Film Administration mentioned "following market rules and respecting audience choices," indeed, in recent years, the overall decline in the quality of Hollywood blockbusters and the gradual weakening of their performance in the Chinese market is an objective fact. This year's Captain America 4 and Snow White films have received overwhelmingly negative reviews even among loyal Marvel and Disney fans. What are the reasons behind this trend?

Lian Cheng Yichuai: I think this is normal. On one hand, in the ideological domain, China may be one of the few countries in the world that can rival the US. Moreover, although there are still many bad films, objectively speaking, domestic films have made relatively significant improvements in terms of quality, richness, and genre maturity compared to previous years, and are increasingly able to relatively meet the needs of domestic audiences.

Under such circumstances, audiences subconsciously raise their thresholds for appreciating films, leading to a noticeable demystification or aesthetic fatigue towards Hollywood films. Previously, the special effects that once dominated the world have little impact on Chinese audiences today. Combined with various outdated content plots, lack of innovation in IPs, and so-called diversity, they are no longer aligned with the tastes of most Chinese audiences.

The highly anticipated introduction film Snow White in the first half of 2025 sparked unprecedented negative reviews in the Chinese market

Adding to this, during the pandemic, China did not import Hollywood films for several consecutive years. After the pandemic ended, Hollywood films re-entered the Chinese market, and if they wanted to achieve good box office results, they needed to invest significantly more in promotions. But now, Hollywood films are willing to invest in promotional costs relatively limited, clearly declining compared to pre-pandemic levels, seemingly losing their former vigor, feeling that making money in the Chinese market isn't as easy as before, so they cut back on investments, making it harder to earn money, thus entering a downward spiral.

Observer Network: When the proportion of American films decreases, is it an opportunity or a greater challenge for Chinese filmmakers? In the current anxious and unstable market atmosphere, can the Chinese film industry handle it? What positive explorations can we make based on this change?

Lian Cheng Yichuai: Clearly, the world is currently in a state of "changing banners." The Chinese film industry must seize such opportunities.

On one hand, Trump wants to go against globalization, but the Chinese film industry must actively globalize itself. The success of Ne Zha 2 holds great significance for us, becoming an important opportunity for Chinese-language films to output overseas. For more than a decade, the public has never been so concerned about the growth of overseas box office revenues. Next, I think all top-tier Chinese-language films should plan ahead for the overseas market.

Didn't Ne Zha 2 receive criticism for lacking English dubbing versions and Japanese subtitles? Shouldn't movies like The Wandering Earth 3 plan ahead for the overseas market in advance instead of waiting until after the release?

The release of Ne Zha 2 in the American film market, although the number of screenings and box office revenue cannot compare with contemporary American films, has ignited expectations for the international market

Secondly, after the decoupling of Sino-US trade, an important point is to stimulate the domestic demand market. Can government consumption subsidies boost the film market again? Or can some policies revolve around the film industry? Because the film industry can actually drive other consumption, such as dining and entertainment.

Thirdly, the Chinese film industry should learn from the path-changing overtaking of the Chinese automobile industry—the key to the transition from oil-powered cars to electric vehicles is finding breakthroughs in technology and achieving them first.

Americans invented sound films and color films, and North America pioneered IMAX films. Can we find breakthrough points in areas like VR films? Last year, official VR film registration indicated that it has entered the preparatory stage for the cinema market. For example, more sci-fi brain-computer interface technologies—these technical breakthrough points should be found because every revolution in the film industry is essentially a change in the form of films. If China can invent a new form of film, it will inevitably regain dominant position in the film market.

Observer Network: That way, we can escape the current anxiety and internal competition and welcome a brand-new future.

Lian Cheng Yichuai: Yes.

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