Cannes: Trade War Rattles U.S., China Film Sales Relationships

Courtesy of Cannes
'Capernaum'

President Donald Trump’s escalation of tensions with Beijing has limited acquisitions of small and mid-range indie projects in the Middle Kingdom. "I don’t feel confident about buying American movies right now," says Ruby Xie, director of international acquisitions for Rise Culture, a Beijing financial holding group that is in Cannes this year.

Donald Trump’s escalation of the U.S.-China trade war on the eve of Cannes has left China’s once cash-flush film buyers newly wary of U.S. product this week. Few analysts expect Beijing to retaliate against Trump’s tariffs by blocking Hollywood studio tentpoles from distribution — local exhibitors are too reliant on such titles for revenue, and their absence from screens would generate unwelcome attention to the trade war among the Chinese public — but small and mid-range American films could be more exposed, Chinese buyers fear.

"I don’t feel confident about buying American movies right now," says Ruby Xie, director of international acquisitions for Rise Culture, a Beijing financial holding group that is in Cannes this year.

The fear is that Beijing will allow Hollywood blockbusters their usual reign, but U.S. titles acquired through the country’s secondary buyout import system will find it difficult to land release dates, as regulators favor European or Asian imports instead. The recent success of more diverse fare in China — such as Bollywood blockbusters, or Nadine Labaki’s Lebanese drama Capernaum, which has earned an astonishing $45 million — would give Beijing confidence that the audience won’t miss American genre vehicles. "It could benefit companies like us," says Martin Moskowicz of Germany’s Constantin Film, which just received approval for the Chinese release of its English-language horror film The Silence, starring Stanley Tucci. "Having a film that is not designated as American definitely helps getting government approval for release in China." 

The trade war also is exacerbating the already challenging economic conditions in the Chinese industry. The value of the yuan vis-a-vis the U.S. dollar has fallen 3.5 percent since the start of March, upping costs for China’s content acquirers. Some analysts believe Beijing will allow the yuan to slide even further as a quick means of offsetting the impact of Trump’s tariffs by making Chinese goods more affordable. An even weaker yuan will only encourage capital flight from China’s shores, though, and that, in turn, will likely lead Beijing to further tighten oversight of offshore money transfers.

Roland Emmerich’s $150 million sci-fi pic Moonfall, easily the biggest U.S. film package brought to Cannes this year, is said to be asking upward of $30 million to $40 million for China rights. In the easy-money era of just three years ago, a bidding war among cash-flush Chinese contenders could be banked on. In 2019, the landscape is very different. Says one veteran Chinese film executive, "This is a very unpredictable time."

This story first appeared in The Hollywood Reporter's May 18 daily issue at the Cannes Film Festival.