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Insiders say Beijing is unlikely to have an impact on its burgeoning box office in retaliation for tariffs, but the US's aggressive stance could further delay negotiations over quotas of movies.
As President Trump escalates what could become a prejudicial and prolonged trade war with China, many in the world of American cinema begin to wonder if Hollywood could soon be dragged into the fray
in relations US-China. The biggest Hollywood films now make a substantial part of their income in China, such as Universal's Jurassic World which has accounted for nearly 25% of its global ticket sales of $ 1.069 billion . And as the box office of the Middle Kingdom continues to climb – the turnover in China is up 16% in the first half of 2018 – this importance can only increase, the country having to exceed the 39 North America as the largest film market in the world. Yet, until now, film analysts in the United States and Beijing have remained quite optimistic about the craze for transpacific trade
Peter Schloss, CEO of CastleHill Partners, a bank of 39, business based in Beijing. focused on the media and entertainment industries, points out that Beijing has been very specific with its retaliatory tariffs, mostly isolated industries in the states that voted for Trump. "If you want to send a message of economic pain to Trump, you are not looking at Hollywood, you are talking about Iowa farmers and factory workers in Pennsylvania," he says
. As studio directors in Burbank, hurting Hollywood on the left is more likely to delight the current chief tweeter of America.
China also remains relatively dependent on high-budget American films to keep its theaters full year-round. mutual interdependence that should provide some isolation – at least for the moment. Any sharp reduction or suspension of US film imports could easily push up the annual Chinese box office growth while hurting local distributors and exhibitors, many of whom are still expanding. "China chasing Hollywood in its infancy seems very unlikely, simply because it has more costs than benefits," says Stanley Rosen, a USC professor specializing in the US. Chinese film industry
. 200 billion dollars of Chinese products could change the equation, as this will force Beijing to go beyond its limited "good options" for retaliation. China imported $ 130 billion worth of US goods last year, less than a third of the value of US imports from China. This means that Beijing will not be able to match Trump's tariffs, and may have to look for other "qualitative measures" to fight back. The Wall Street Journal newspaper quoted unnamed Chinese officials as saying Beijing plans to suspend licenses for US companies, delaying merger approval and increasing border inspections of US goods .
A tariff proposal of $ 200 billion, including one in particular, caught the attention of observers on both sides of the Pacific: "cinematographic film of a width of 35 mm or more, exposed and developed , incorporating or not a soundtrack ". It is unclear whether or not this is a tax on the importation of Chinese films into the United States (for example, the description seems vague about whether it applies to digital recordings, average expression of the vast majority of contemporary Chinese movies in the United States). But if that is the case, the Trump administration would seem to be inviting China to retaliate in one of the few industries where the United States is getting a significant trade surplus over China. The most profitable film of the Chinese industry in North America last year was Wolf Warrior 2 with $ 2.7 million sales; The largest Hollywood film in China, meanwhile, is that of Universal The Fate of the Furious with 392.8 million dollars.
Trump's list of additional rates is now subject to a two-month public comment period. Meanwhile, the Chinese Ministry of Commerce said Wednesday in a statement: "To protect the fundamental interests of the nation and its people, the Chinese government is obliged, as in the past, to respond."
with tariffs on 500 billion dollars of Chinese products, as he threatened, everything, including Hollywood, will be at stake. "
Some American analysts have suggested that Hollywood could also to be hurt if China limited its investments in American films and media companies.The ones closest to the market are less baffled by this eventuality, knowing that Beijing has mostly closed this tap there is more than one worried about rising domestic debt, capital flight and risky investments, Beijing ended the frenzy of China-Hollywood talks in the first months of 2017 (Lionsgate has invested $ 375 million in 2015)., just like the co-financing agreement of 18 images of Huayi Brothers Media to STX – sources close to the two companies declared THR before the trade war that the investors nts would probably not be renewed). In the meantime, Hollywood majors, as they have done so many times before, have found familiar sources of funding (the big banks), while giving the go – ahead. sending to new opportunities (Saudi Arabia).
US studios should not expect to move on the long renegotiation of the Chinese film import quota. The former commercial executive, who expired in early 2017, was covering everything from the number of American films accepted by China in its cinemas until when and how titles could be released based on revenue that foreign studios could eventually bring home. The United States hoped to obtain Beijing's consent to introduce more securities into its market, while obtaining a larger share of ticket revenues (studios currently report only 25% of sales in China, while the international standard is by 40-50%)
Sources tell THR that Hollywood pressure for more favorable terms had made little progress before the trade war, however, partly because the l & # 39; Trump administration had not made the issue a priority, and also because the Chinese media regulator has undergone a major restructuring, which has left several key positions unfilled bargaining. In the meantime, both parties remained faithful to the old expired agreement.
Trump's tactics can hardly help things anytime soon. Two years ago, many Hollywood executives were optimistic that their position on the world's largest film market was on the brink of strengthening – they would now prefer to keep their heads down
. Do not expect China to suddenly offer new benefits to Hollywood all this time. "
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