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China’s Cultural Isolationism

When you talk about China’s trade disputes with United States, usually it’s a discussion regarding the artificially cheap Yuan, rare earth metals export restrictions, or even the staggering trade imbalance.  The last thing you’d be worried about is whether or not the Hollywood studios that pumps out the Harry Potter franchise will make its ends in foreign markets.

But worrying, some are.  Apparently China is quickly becoming the largest market for feature films (among a variety of other entertainment and media products), with 6,200 theaters at a rate of 3 new venues every day – despite the fact that authorities only allow in only 20 foreign films a year.  The reason is that China, similar to Russia and some other countries, are finding this influx of foreign cultural products (ie Hollywood films) an uncomfortable assault on their identity, nationalism, and the ability of their own homegrown film and TV industries to grow and survive in the global market.  A less charitable assessment of this protectionism would be that it reflects a propagandistic fear that “too much Americana” leads to other ideas… though I’m not sure how  seeing such visionary achievements of free society as Transformers: Dark of the Moon would send me out to organize my friends and demand democratic reforms (maybe the opposite, though).

Writing in Time, Fareed Zakaria has a very interesting article on why China has blocked access to the summer’s biggest international cinema hits in favor of pushing a locally made big-budget epic about the rise of the Chinese Communist Party:

Despite many mass ticket giveaways, cinema houses are reported to be empty. A barrage of negative reviews on the Internet have been censored. On VeryCD, a pirated-film website, more than 90% of users described the film as “trash.”

On one level, this is just a crude propaganda effort by a Chinese regime seeking legitimacy. But there is another aspect to this story. China is going through an internal struggle over whether it needs to borrow more ideas from the West or follow its own particular course. The question of how to handle Western films is becoming part of a much larger debate. (…)

And Hollywood isn’t alone. The CEO of General Electric, Jeff Immelt, told the Financial Times earlier this year that it appeared that China did not want Western companies to succeed in that country anymore; he was voicing the feelings of many foreign CEOs. There is growing evidence in many areas that Beijing is favoring locals over Western companies, even violating the rules of market access and trade. The World Trade Organization ruled recently that China’s regulations on foreign movies were a form of illegal protectionism and had to end. So far, Beijing has done nothing to abide by that ruling, though it is likely to expand its quotas to mollify the WTO. (…)

After centuries of isolation, China has grown in power and strength because it opened itself to the world, learned from the West and allowed its industries and society to borrow from and compete against the world’s best. It allowed for an ongoing modernization of its economic structures and possibly its political institutions as well. Its leaders Deng Xiaoping and Jiang Zemin understood that this openness was key to China’s success. A new generation of Chinese leaders might decide they have learned enough and that it is time to turn inward and celebrate China’s unique ways. If that happens, the world will confront a very different China over the next few decades.

We think it’s a bit premature to argue that China has already decided to turn away from the world – and its money – but this has much less to do with culture and a fear of international influences causing any diminishing quality of identity than it does with ideology and economics.  For as much as China has covered their manufacturing costs locally and are able to dump products in Africa under cost, Hollywood is also familiar with these basic principles of international trade – make your money at home, cover your investment, and then add to the profit by under-bidding the domestic film and TV industry in other countries.  Both China and Russia are committed to spending government money to shore up a local culture industry, and there’s nothing wrong with that.  It is more this sense of incompatible and imaginary isolation from an increasingly interdependent and networked world which will be problematic.

For all these years that those guys over at Stratfor have talked about China’s ideological geography as an island, perhaps it has become a self-fulfiling prophecy.  In a typical, top-down statist manner, today China’s Minister of Culture Cai Wu said thatexports of contemporary and pop cultural products are deficient compared with traditional products, resulting in the international community’s lack of understanding of the country’s current situation.

I guess Chinese studios better start making some good movies. Or else.