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Will Trump Target China? Studios Watch and Wait for Any Potential Impact

WASHINGTON — President Donald Trump reportedly is ready to take a more aggressive posture toward China and trade, a prospect that has generated some concern among studios about whether it could ultimately trigger some kind of retaliatory measures.

Axios reported that the White House was looking at directing the U.S. Trade Representative to investigate China over its theft of intellectual property. On Twitter, Trump has linked China and trade to the problems with North Korea. Last week, he complained on Twitter about China’s advantage in trade and “yet they do nothing for us in North Korea, just talk.”

Wilbur Ross, the Secretary of Commerce, recently published an op-ed in the Wall Street Journal, “Free Trade Is a Two-Way Street,” arguing the China and other countries put up barriers to U.S. imports.

Democrats, too, are amping up their rhetoric about China. On Wednesday, Senate Minority Leader Chuck Schumer took aim at Chinese investments in U.S. companies, as part of a set of proposals to try to curb what Democrats see as unfair practices.

“China has made a profession of doing this. We are not going to let them do it anymore,” Schumer said at a press conference on Capitol Hill. “We are not opposed to foreign investment. We are opposed to foreign investment that only benefits the bottom line and leaves workers out in the cold.

“We are opposed to foreign investment with certain countries like China that do not allow reciprocal access to American companies in their country.”

Schumer has targeted Dalian Wanda Group’s investments in U.S. entertainment, along with restrictions on film imports, to make his case. But one of Wanda’s highest profile investments, a $1 billion purchase of Dick Clark Productions, fell through in March.

There are two schools of thought over what impact a tougher U.S. trade stance toward China could have on Hollywood. One is that, were a trade dispute to escalate, the entertainment industry could find it’s vulnerable to some sort of retaliation from China, particularly as negotiations are ongoing on film imports into the country, as U.S. negotiators seek a rise in the quota and other measures. The current import quota is 34 movies, with revenue shared, and that is a minimum, not a maximum. The talks are ongoing.

The other is that any kind of Chinese response would likely be aimed at other industries, like steel and autos, not U.S. cultural exports. As one industry executive said, the Chinese “have much bigger fish to fry” should the situation deteriorate.

This summer, Hollywood movies have been dominant at the Chinese box office, which, while a disappointment to Chinese ambitions in growing its own industry, also has helped fuel the growth of it exhibition sector. That is important not just for theaters but for retail. In other words, the Chinese government wouldn’t want to aim any response at such a lucrative sector.

Jonathan Wolf, managing director of the American Film Market, was cautious about coming to conclusions at this point about what the impact will be.

“Trump is a public negotiator,” he said. “And unless you are one of the negotiators you don’t have all the facts. It is dangerous to take a mid-talks status report as a concrete sign of where things will end up.”

Patrick Frater contributed to this report.

 

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