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Tighter Controls for Hollywood Loom as China’s Communist Party Congress Reaffirms Xi Jinping

The apotheosis of Chinese President Xi Jinping is well nigh complete. China’s just-concluded Communist Party congress, a key political gathering held once every five years, cemented Xi’s status as the country’s most powerful leader since the Great Helmsman himself, Mao Zedong, with no rivals to challenge him.

The congress also enshrined Xi’s authoritarian, assertive approach to policy as official doctrine, meaning that China’s ideological and financial clampdown of the past several months is set to become the status quo. Xi Jinping Thought has been written into the party’s constitution, an honor not accorded to a living Chinese leader since Mao. In the technology and entertainment space — politically sensitive areas — both domestic players and foreign suitors such as Hollywood will likely have to get used to increased central control by Beijing.

Indeed, some of China’s biggest entertainment executives quickly lined up to kowtow to Xi and his agenda for his second five-year term, which he laid out in a speech lasting more than three hours. That agenda includes pursuing China’s own system of governance (read: no Western-style democracy), promoting “socialism with Chinese characteristics,” easing the vast social inequalities that have arisen over the past 30 years of breakneck economic development and adopting a muscular foreign policy.

“Listening to [Xi’s] report, I felt a surge of emotion,” Dalian Wanda chairman Wang Jianlin enthused. The property-to-entertainment conglomerate has been severely chastened by Xi’s government in the last few months, forced to halt its aggressive overseas acquisitions and unload many of its hotels and theme parks.

Likewise, Jack Ma, founder of e-commerce giant Alibaba, made it known that he supports Xi’s proposals on income redistribution. Alibaba, too, has felt the heavy hand of government direction. Part of Xi’s vision of a strong, globally powerful China entails shoring up the country’s laggard state-owned enterprises and giving them the chance to catch up to or overtake private companies in some fields. Last month saw a round of government-ordered investments by leading private firms, including Alibaba and Tencent, in state-owned enterprises such as telecom company China Unicom. There have also been new orders to install Communist Party functionaries on the boards of private companies.

Xi’s ambition for China to create world-beating brands in high-tech sectors like electric cars and artificial intelligence should give some impetus and latitude to players in those fields. “The push for digital innovation will benefit the internet companies,” said one Asia-based analyst, who asked not to be named because of the political sensitivity of the party congress. “The flip side is that we have seen more stringent control on media in the past five-year regime under Xi — i.e., tighter foreign format imports, a ban on Korean content, tighter censorship and control over content, etc.  … Xi’s leadership has shifted from less regulation to tighter central control.”

Listening to [Xi’s] report, I felt a surge of emotion.”
Wang Jianlin, Dalian Wanda chairman

Foreign companies have long been accustomed to playing by the Chinese government’s rules, usually in hopes that those rules might, at some point, bend in their favor. But under Xi — whom The Economist recently declared the world’s most powerful person, over U.S. President Donald Trump — there is probably little likelihood of greater openings for Netflix, Facebook or Twitter, which remain banned in China, or for the Hollywood majors. Negotiations on movie import quotas and distribution terms were halted during the party congress.

The eight-day gathering offered few specifics about the entertainment industry. A briefing on the sidelines by the State Administration of Press, Publication, Radio, Film and Television, China’s media regulator, boasted of this year’s 20% upswing at the domestic box office after last year’s worrisome slowdown, an increase driven by hits such as “Wolf Warrior II.” That action thriller, notable for nationalistic themes of which Xi would no doubt approve, has made more than $850 million at the Chinese box office.

The party congress also produced no clear successor to the 64-year-old Xi, an indication that the president may try to rule beyond the two terms of his immediate predecessors. His blueprint for China is meant to guide the world’s most populous country for at least
the next 30 years — which means that homegrown entertainment companies and Hollywood players have plenty of time to get used to new constraints on doing business in the Middle Kingdom.

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