From Titanic to Tariffs: The Changing Fortunes of Hollywood in China

The ongoing trade tensions between the US and China are writing a dramatic new chapter in the Hollywood-China saga. It's a story with more twists than a Christopher Nolan film!

The latest development? China has decided to ‘moderately reduce’ the number of Hollywood movie releases in the Chinese market. China’s National Film Administration has done this in response to the sky-high tariffs imposed on Chinese goods by US President Trump. “We will follow market rules, respect the audience’s choice, and moderately reduce the number of American films imported,” it said.

Hollywood’s fate in China

So here's the big question: Will this shake things up for Hollywood? To get to the bottom of that, we need to dig into the history of how China and Hollywood have been getting along (or not) over the years.

But first, let's look at the present landscape. China's movie industry demonstrates significant scale. In 2024, its box office revenue reached 54.9 billion yuan, or approximately $6 billion. This figure positions China as the second-largest market globally, representing 23% of the worldwide box office.

The Chinese middle class experienced significant growth from the late 1970s with economic reforms, which continued into the 2000s and 2010s. Watching movies in theatres became a popular activity for the young urban Chinese. Rising disposable income gave a boost to the entertainment industry. That’s when big-budget films from Hollywood flocked to capture the Chinese market. After all, a successful run in China, the second largest movie market in the world, could significantly increase a film's global earnings.

The appeal of Hollywood in China

The sheer size of China's population and its growing cinema infrastructure presented a massive opportunity. Some Hollywood films were even modified to appeal to Chinese audiences. Here are a few examples:

“Iron Man 3" included unique content like bonus footage and scenes filmed in Beijing. "Looper" includes elements that some have interpreted as projecting China's future global leadership. "The Great Wall" was a co-production between Hollywood and Chinese studios, with a largely Chinese cast and filmed on location in China.

The first ‘Avatar’ film initially earned $203 million in China after its January 2010 release. A 2021 re-release helped it become the highest-grossing film worldwide again. The sequel, ‘Avatar: The Way of Water’, was released in China on December 16, 2022, coinciding with its global release.

Here’s a look at how Hollywood movies fared in China in 2024.

For much of the 20th century, China's film market was relatively small. However, it experienced rapid growth in the 2010s, surging from under $1 billion in 2011 to over $9 billion in 2019. Hollywood films significantly contributed to this expansion, with American studios capitalising on China's large audience to generate substantial revenue for their major releases.

China and Hollywood: A fading romance?

But Hollywood started losing its grip once China’s homemade movies began taking over. Recently, Chinese-made films have become the dominant force in China's cinemas, pulling in approximately 80% of the annual box office revenue, up from around 60% before 2020. The finest example of this trend is the release of 'Ne Zha 2' earlier this year, an animated movie that has grossed almost $1.9 billion. This makes it the highest-grossing animated film ever produced globally and places it at number 8 on the all-time box office chart. In 2024, Hollywood films accounted for only about 5% of the total box office revenue of approximately $6 billion in China.

China is not an easy market to break into, and US-based studios like Warner Bros. and Walt Disney Pictures have always found it hard to enter the country. The number of Hollywood films released in China per year has varied over time due to a combination of factors, including government regulations and market forces.

How foreign films enter China

China has historically implemented a quota system to limit the number of foreign films, including those from Hollywood, allowed to be shown in its theatres. This was partly to protect and promote the domestic film industry.

Revenue-sharing films: These are the most desirable for Hollywood studios, as they get a percentage of the box office earnings. These are the films most affected by the quota.

Flat-fee films: Foreign films can also be sold to Chinese distributors for a fixed price, but the studio doesn't share in the box office revenue.

On average, China accepts 10 films a year from Hollywood. However, Hollywood Studios are getting pulled into President Trump’s Trade war, and things could change for the two countries.

A slew of potential Hollywood blockbusters are lined up for release later this year, including Tom Cruise’s ‘Mission Impossible: The Final Reckoning’ and ‘Superman’. What will be the fate of these films?

As for President Trump, he says he’s heard of worse things than China’s retaliatory measures for the film industry. As tensions simmer, movie buffs can only wait and watch.