China's Quota Mess: Which Hollywood Blockbusters Could Get Left Out?

Chris Hemsworth as Thor

The studios and state-run China Film Group are still at odds as observers claim home-grown titles get all the advantages. Says one source, "The Chinese have done a great job of marginalizing our movies while pushing their own."

This story first appeared in the Oct. 11 issue of The Hollywood Reporter magazine. 

As Leonardo DiCaprio and Harvey Weinstein were visiting China in late September to promote Wanda Group's $8.2 billion studio project, new tensions were brewing between Hollywood and the state-run China Film Group. Studio sources in Beijing tell THR the government's annual quota of 34 foreign movies is perilously close to full, though it remains unclear whether that means some high-profile U.S. films will be denied coveted releases in 2013.

PHOTOS: Studios' New Box Office Pain: Homegrown Films Are Beating Tentpoles Overseas

"The slots do all appear to have been filled, but it's always difficult to tell in China whether they might allow more -- you can never be certain," says one source. Another insider says the quota is "a fluid number, not set in stone."

Relations between Hollywood and China worsened this year after China Film Group refused to hand over hundreds of millions of dollars in box-office revenue because of a dispute over tax rates. The MPAA negotiated a deal in August that requires CFG to pay $100 million to $150 million owed. But now U.S. studio releases could be sidelined.

Sources say some big titles -- including The Lone Ranger (October), The Hobbit: The Desolation of Smaug and Thor: The Dark World (November) and The Hunger Games: Catching Fire (December) -- already have been approved for release. But there are no slots available for other Hollywood movies, meaning such major titles as Summit/Lionsgate's Ender's Game and Disney's Planes could be out.

In 2012, China expanded its quota of overseas movies from about 20 to 34 a year, including 3D and Imax films. Since then, CFG has made several moves favoring homegrown titles over Hollywood fare. The result: Box-office revenue for domestic movies in China overtook that for foreign films during the first half of 2013. Of 146 titles screened in China during that span, 117 were domestic productions, and domestic film revenue was up 124 percent compared with the same period in 2012.

STORY: Studios Wary of Releasing Animated Films in China

The boom means there are 16 total movies in release during the Golden Week holiday that began Oct. 1 -- and nearly all are China-made films. Says one overseas studio source, "The Chinese have done a great job of marginalizing our movies while pushing their own."