Major White House Deal Will Allow 50% More Hollywood Movies into China

A major source of contention between the U.S. and China over the years has been the restrictive measures the Chinese government took to limit the number of Hollywood films released in the country as well as the unfair compensation practice that allowed US studios to collect as low as a measly 13% of box office revenue. On Friday evening, Vice President Joe Biden and Chinese Vice President Xi Jinping announced a landmark deal that will “make it easier than ever before for U.S. studios and independent filmmakers to reach the fast-growing Chinese audience” and allow “significantly more job-supporting US film exports”.

While the current quota of twenty foreign films allowed into China each year will remain the same, China has agreed to allow an additional 14 so-called enhanced format foreign films — 3-D and IMAX movies — into the country each year. Additionally, the pact will nearly double compensation levels for U.S. blockbuster films distributed by Chinese state-owned enterprises to 25%. In comparison, US box office proceeds are usually split 50/50 between exhibitors and studios.

Given that China’s box office totals $2.1 billion and is rapidly growing, it’s no surprise that Hollywood is rejoicing at the news. “This landmark agreement will return a much better share of the box office revenues to U.S studios, revising a two-decade-old formula that kept those revenues woefully under normal commercial terms, and it will put into place a mechanism that will allow over 50% more U.S. films into the Chinese market,” according to the MPAA.

Walt Disney Co. president and CEO Robert Iger added: “China is one of the most populous countries in the world, and this agreement represents a significant opportunity to provide Chinese audiences increased access to our films.”