The furor over a Chinese spy balloon that flew over U.S. airspace has further chilled D.C.-Beijing tensions, but the entertainment industry already has been swept up in the heightened atmosphere of American hawkishness.
Hollywood studios and producers are poised to get a new level of scrutiny over their dealings with China — reflecting a bipartisan hardline toward Beijing and escalating concerns over its influence.
A little publicized provision of a recently passed defense bill restricts the U.S. government from spending funds on movies that, to gain entry into the Chinese marketplace, are altered in the face of Chinese government dictates.
The provision in the National Defense Authorization Act , approved in a bipartisan vote of Congress and signed by President Joe Biden in December, is the latest example of an increased focus on China's role, not just in the entertainment industry but also in sports and social media.
While Republicans have led attacks on Hollywood, particularly over changes to made to major blockbusters, more recently Democrats have joined in, as the House of Representatives' establishment of a new China select committee garnered bipartisan backing.
The NDAA provision prohibits the U.S. government from spending defense funds to cooperate with projects that seek "pre-approval of the content" of a project from the Chinese government, or "modifies or deletes in any way the content of the project as a result of any direction from any entity of China's government or its Communist party."
The Motion Picture Association is watching as the Department of Defense creates actual policy guidelines for military cooperation. There is a long tradition of U.S. government assistance on film and TV projects, including the most recent Top Gun: Maverick , typically in the form of military equipment and technical advisement.
While the number of U.S. releases in China has been falling in recent years, and the actual number of movies that seek Department of Defense cooperation is small, there are studio concerns that the provision will only lead to a further reduction of exports. And some in the industry see the provision as symbolic, another way to target left-leaning Hollywood in the culture wars.
"It's a very silly political statement that has no real-world application," said Schuyler Moore, corporate and entertainment finance attorney at Greenberg Glusker in Los Angeles.
It's long been common practice for studios and producers to make edits to projects to conform to cultural sensitivities in different marketplaces — not just in China but also other countries. U.S. lawmakers, particularly on the right, seized on examples of changes to movies or examples of self-censorship as a way of appeasing Beijing government censors.
In 2019, the trailer for Top Gun: Maverick showed Tom Cruise's character wearing a bomber jacket with two of the flag patches, for Taiwan and Japan, replaced with other symbols. The flags were restored when the film was finally released last year, albeit not in China.
The incident was cited by Sen. Ted Cruz (R-TX) as he introduced legislation in 2020 to condition the U.S. government from providing technical or other types of support on projects that agree not to alter content "in response to" or "in anticipation of" a request by the Chinese government or Communist party.
The spotlight on the issue of Hollywood altering its movies for China became a talking point, with then-Secretary of State Mike Pompeo and then-Attorney General William Barr blasting Hollywood's China practices in speeches during the summer of 2020. As the country was reeling from the impact of Covid, Barr cited reports that World War Z , released in 2013, as having removed references to a virus originating in China "in the hope of landing a Chinese distribution deal." That deal never materialized. He also cited Marvel Studios' Doctor Strange , in which he claimed that filmmakers changed the nationality of a major character from a Tibetan monk to Celtic.
"This is a massive propaganda coup for the Chinese Communist Party," Barr said. "The story of the film industry's submission to the CCP is a familiar one."
But even those who have extensive experience trying to tap the Chinese marketplace saw the attacks on the industry as more than just election-year rhetoric.
Chris Fenton, the former president of DMG Entertainment Motion Picture Group and GM of DMG North America, said the situation in China is more than merely modifying movies for that country's market.
"Where it is not excusable is where Beijing pressures us to do it for the rest of the world," he said.
The author of Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA and American Business , Fenton said that CEOs and other top executives face the pressure from shareholders and investors of missing out on one of the world's top markets. But he warns of a situation where "we start to censor ourselves, prohibiting stories from being told, buying scripts or hiring people that we think Beijing doesn't like."
"The problem is there is no free market capitalism if you don't protect the foundation of the nation that is guarding that," he said.
Since 2020, the hawkishness toward China has intensified, crossing party lines, as was evident by then-House Speaker Nancy Pelosi's surprise trip to Taiwan last year. Beijing responded by increasing military exercises and firing off ballistic missiles nearby.
Cruz's proposed legislation, called the SCRIPTS Act, did not advance, nor did a new version offered in the last Congress. But the concept of the legislation made its way into the NDAA, despite MPA lobbying against it. In the back and forth of negotiations over massive spending bills, it's a common tactic to include provisions that didn't advance as stand-alone legislation yet aren't enough of a dealbreaker for lawmakers to withhold their support. The NDAA ultimately cleared Congress with overwhelming bipartisan support.
The NDAA singled out not just entertainment but other industries, including a higher-profile provision to restrict U.S. government funds from being used to buy products that include Chinese semiconductors. A separate end-of-the-year omnibus spending bill also included a ban on TikTok on government devices.
Last month, the House, in an overwhelmingly bipartisan vote, created a select committee on competition between the U.S. and China. Its chairman, Rep. Mike Gallagher (R-WI), soon after made clear that the entertainment industry would be the subject of hearings, as he said that he would like The Walt Disney Co.'s Bob Iger to testify, as well as representatives from tech and NBA commissioner Adam Silver, over business dealings in the country.
"Consider this me giving them the initial warning order that they'll have to testify before the committee," Gallagher told radio host Hugh Hewitt.
In a statement to Deadline, Cruz said he expects the Biden administration to implement the NDAA's China-Hollywood provision "faithfully."
"The language is designed to counter China's campaign to control what Americans hear, see and ultimately think," he said. "Under this provision, Hollywood studios that want to work with the government — things like using military locations or resources for filming — will have to keep the CCP off of the set and out of the editing room."
There are questions, and doubts, of how the provision will be carried out in practice, or even how impactful it will be.
The NDAA provision "is of course not surprising, since the only thing Democrats and Republicans seem to agree on these days is that China is evil and must be contained," said USC professor and China expert Stanley Rosen.
He said that "we can expect more such insertions about China into bills that are essential to U.S. security, and the votes would not be there to remove such insertions. That said, it would be very difficult to monitor since Hollywood doesn't advertise when it asks for 'pre-approval' from China. Moreover, they don't need to ask a government or party entity since they have representatives on the ground who can do that for them."
The only thing Democrats and Republicans seem to agree on these days is that China is evil and must be contained.
USC professor and China expert Stanley Rosen
He also noted that the Hollywood romance which China is "not what it used to be," as studios greenlight films and project global returns in the absence of the Chinese market.
He said that "this seems to be standard rhetoric with no enforcement likely; however, given the trajectory of the U.S.-China relationship, perhaps there will be more enforceable strictures coming. If anything, it may also be an attempt to intimidate Hollywood, perhaps to reject Chinese funding, even from non-governmental entities like Alibaba and Wanda."
Only 15 U.S. films were allowed into China last year, by Deadline's count, as the country moves toward its own homegrown titles. That's lower than 2021 and way down from 2019, when there were more than 30 releases. Given the opaque policies of the government, producers hoping for a release in China take a bit of a gamble if they are depending on returns there as part of revenue projections. The film quotas and revenue sharing limits long have been the source of frustration. And studios are perhaps a bit more mindful of the PR disaster that awaits if they acquiesce to some of the more egregious demands. Last year, according to a report in Puck, producers refused to remove the Statue of Liberty from Sony's Spider Man: No Way Home . Imagine the outcry had the studio done so.
Nigel Cory, associate director of trade policy at the Information Technology and Innovation Foundation, argued in a 2020 report that the impact of efforts like Cruz's legislation would be to actually bolster China's film industry.
Cory said that the Cruz legislation "targets a legitimate concern — China's extraterritorial application of censorship — but it misses the target in hitting American moviemakers rather than Chinese censors."
"China sees the movie industry as a strategic industry of the future, not only for the export revenues it will bring in, but for the opportunity to export the Chinese Communist Party worldview," he wrote via email. "Limiting U.S. movie exports through the kinds such as via the SCRIPTS Act only speeds the process by which China gains global market share at America's expense."
He also has doubts of how the Department of Defense will implement the NDAA law, with questions of how they will decide what degree of contact with the Chinese government would be a "deal breaker," to what type of evidence they will need. Moreover, the military already has discretion on choosing whether to cooperate on a project.
Robert O'Brien, President Donald Trump's former national security adviser, argued against the provision as the NDAA was making its way through Congress last fall. He argued in an op ed that the provision would be an unintended "own goal" in the U.S. competition with the Chinese Communist party, limiting films showcasing "American values and strength." "Concerns about the CCP's propaganda machine are real and I have spoken about them at length," he wrote. "But instead of risking ending the relationship between the DOD and Hollywood, we should take the fight directly to the CCP." Instead, he said that U.S. immigration authorities should prohibit Chinese nationals of foreign agents who seek to insert propaganda or censor U.S. films, and that sanctions should be imposed.
A spokesperson for the DoD did not return requests for comment.
Fenton said that what is needed is a blanket policy that sets the boundaries of engagement with China, "so that when I do the right thing I am not simply replaced by somebody who does the wrong thing."
In the meantime, Fenton sees the practices of "bending over backward" to access the Chinese market as coming to an end. "Kowtowing to Beijing no longer seems to guarantee any return from China anyway," he said. "Even worse, the rest of the world may penalize you for being the one studio blatantly attempting to placate authorities by stifling the creative freedoms of filmmakers and amplifying Beijing's narrative — truly a no-win situation."
Nancy Tartaglione contributed to this report.
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