The story of China and Hollywood's big-screen romance

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0:11This is The Indicator from Planet Money. I'm Adrian Ma. Americans love their movies. Historically, no country can even approach the amount Americans spend at the box office each year. That is until China came along. The U.S. and Chinese film industries actually have a long intertwined history. Today on the show, we continue our week-long look at the movie biz with a tale that melds art, commerce, and geopolitics. A three-act saga about the symbiotic and at times tumultuous relationship between Hollywood and China. This message comes from Dell Technologies. Your new Dell PC with Intel Core Ultra helps you handle a lot when your holiday to-dos get to be a lot.

0:57Luckily, the Dell PC helps you get it all done. Get yours at dell.com slash holiday. Support for this podcast and the following message come from Mint Mobile. At Mint Mobile, their favorite word is no. No contracts, no monthly bills, no hidden fees. Plans start at$15 a month. Make the switch at mintmobile.com slash indicator. That's mintmobile.com slash indicator. Upfront payment of$45 required, equivalent to$15 a month. Limited time new customer offer for first three months only. speeds may slow above 35 gigabytes on unlimited plan. Taxes and fees extra. See Mint Mobile for details.

1:40Act 1, China Goes to the Movies. The romance between Hollywood and China begins way back in the early 1900s, the silent movie era. The foundation of early Chinese film industry was actually built by emulating the American-style studio model. That's Ying Zhu, a professor at Columbia University and author of the book Hollywood in China. Although movies were being made in Shanghai, Ying says audiences were most drawn to the American imports, which tended to be flashier and more sophisticated. But this early romance with Hollywood came to an abrupt end in 1950. That's the year after Mao Zedong's Communist Party came into power in China.

2:22A massive campaign was launched to discredit Hollywood films. And watching American films was then deemed unpatriotic. The government took over the movie industry. And for decades, the only films being made were ones that served the Communist Party's interests. In response to Chairman Mao's call, millions of Chinese young people are going to the countryside to receive re-education from the workers and peasants. Not exactly popcorn entertainment. Eventually, though, the Mao era came to an end. And in the 1980s, China was opening up to the world. Its movie industry, though, had basically withered under government control.

3:03So the policymakers look around. They decided that we had to really build up a Chinese film market. And what did they do? They went to Hollywood. Act II, Reunited. In the early 1990s, China was going through major economic reforms. It was expanding trade with the U.S. and other countries. And one part of that trade relationship was movies. Eric Schwartzel covers the film industry for The Wall Street Journal and wrote about this period in his book Red Carpet. The first movie that was kind of formally accepted into Chinese theaters was The Fugitive starring Harrison Ford. I'm not going to turn myself in.

3:42I need help. I need money. Richard is innocent. You'll never find him. The Fugitive was a hit. Though at first, Eric says, these Hollywood flicks trickling into China didn't make much money. That would soon change, though, as millions of people moved from rural areas of China into the cities. And the country's growing middle class developed an appetite for big screen entertainment. And by the 2000s, Hollywood saw their revenue from China soar. You're seeing 20, 30, 40 % year-over-year growth in how much money the Chinese box office is pulling in. Very important to point out that at the same time, in the U.S., box office is flatlining and DVD sales are cratering.

4:27And so suddenly, if you're running a Hollywood studio around 2009, you have one column of revenue disappearing and another one appearing out of nowhere. So if you can add$100,$200,$300 million to the global gross by getting it into China, you absolutely will. But there were considerations large and small that had to be made to make sure that they could get into the Chinese market. Yeah, one big consideration? Films had to make it past government censors. Anything that might have been seen as politically problematic or a little too R-rated or maybe even too PG-13 rated would be cut from the film before it would be shown in theaters.

5:08And in some cases, studios bent over backwards to appeal to Chinese moviegoers. Eric says one of the best examples is Transformers, Age of Extinction, which was released in 2014. Mark Wahlberg uses Chinese protein powder at one point. He goes to an ATM in the middle of Texas, and it's a Chinese bank. The entire third act of the film takes place in Hong Kong. And when the giant robots are destroying the city, the Chinese fighter jets arrive before the Americans to save the day. Now, did studios get criticized for bowing to government censorship and pandering to Chinese audiences? Sure. But what did they care?

5:52They were raking in the RMBs, baby. Hollywood blockbusters put butts in the seats of Chinese multiplexes. It helped resuscitate China's movie industry. And it also made bank for American studios. It seemed at the time like it would be that way forever. Act three, the decoupling. An early sign the romance between Hollywood and China might not be forever came in 2008. That year, DreamWorks released an animated film called Kung Fu Panda. Whose Kung Fu skills were the stuff of legend. And the authorities in China saw it, and they actually grew quite concerned. Because here they saw basically their national mascot and some of their cultural heritage being used by a Hollywood studio to create a blockbuster.

6:44And they actually convened political summits to discuss Kung Fu Panda and ask the question, why didn't we make this ourselves? And so they put into legislation that the government would increase support for China's homegrown animation industry. This was just one of many government policies that helped propel China's movie industry into a new phase. And why not? The geopolitical respect, the soft power potential of a global hit was obvious. So the government offered tax breaks to film production companies. It encouraged co-productions between American and Chinese studios. Chinese officials even made trips to Los Angeles to learn the economics of the movie business from American studio execs.

7:27During these years, China's film industry blossomed. And one person with a front row seat to it all was Dayan Ng. I'd say around 2015-ish, you could almost throw anything, okay, anything in the theaters and it would make, you know, over 100 mil R &B at the box office. Dayan was born in Taiwan, but grew up in the U.S. And around 1995, he moved to China to study at the Beijing Film Academy. When he graduated, he thought about returning to the U.S., but then... I got a phone call from someone who had seen my student's short film. And they're like, hey, do you direct TV commercials? And I'm like, yes, I do.

8:06I will now. Dayan stayed in China, building up his film credits. And by the 2000s, he made the move into feature films, directing dramas and comedies. Over the years, he says he's seen Chinese audiences' tastes evolve and says eventually they got kind of bored with the same old American superhero flicks. And at the same time, you also have domestic films getting better budgets and they're starting to tell stories that are more interesting to local audiences. As a result, Hollywood's revenue from Chinese box offices began a years-long slide. And it's got to the point where U.S. studios considering whether to greenlight a new movie will basically assume that they'll make zero money there.

8:48Meanwhile, China has made its own blockbusters. A recent prime example is Neja 2. This animated movie based on a Chinese folktale that hit theaters in January. So far, it's brought in over$2 billion, making it the highest grossing animated film ever. And that's even before you account for the fact that an English language version is going to be released in the U.S. later this year. Yet more evidence that Hollywood and China have not exactly divorced, but certainly have decoupled. And China just doesn't need U.S. films as much as it used to. And all this, of course, is not helped by the geopolitics of it all.

9:30After President Trump launched a trade war with China this year, one of the ways China retaliated was by further restricting the import of U.S. films. For Dion, it's all a bit of a bummer because he says a lot of this stuff just does not matter to filmmakers or audiences. I'm optimistic in the sense that I feel like the theatrical experience will always be needed. Or to put it another way, the multi-part saga that is Hollywood and China may have had its twists and turns, but it's not over yet. Tomorrow in our movie series, Cosplay, we explore the symbiotic relationship between movie studios and their costumed superfans.

10:10This episode of The Indicator was produced by Angel Carreras and engineered by Debbie Daughtry and Robert Rodriguez. It was fact-checked by Sierra Juarez. Kate McCannon is our editor, and The Indicator is a production of NPR. This message comes from NPR sponsor, Capella University. With Capella's FlexPath learning format, you can set your own deadlines and learn on your schedule. A different future is closer than you think with Capella University. Learn more at capella.edu. This message comes from NPR sponsor Rosetta Stone, an expert in language learning for 30 years. Right now, NPR listeners can get Rosetta Stone's lifetime membership to 25 different languages for 50 % off.

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