SHANGHAI• As trade tariffs and tweets by American President Donald Trump hammer some of China's biggest companies, the country's movie business is taking a hit - from its own government.
Tougher censorship has blocked potential hits and compelled filmmakers to stick to safe formulas that are not winning audiences, while a tax-evasion crackdown has made some investors reluctant to back movies, crimping output even further.
In the year after Chinese President Xi Jinping put the Communist Party's propaganda office in charge of regulating films, China's box office is headed for its first annual decline in at least a decade.
Further hurting the industry, potential summer hits that might have come to the rescue have been canned, with no explanation.
The chill has spread to some of China's most globally recognised names that cinema operators have relied on for hits. In February, director Zhang Yimou's One Second was withdrawn from the Berlin Film Festival and has since been subject to a series of government-ordered re-cuts, trade magazine Hollywood Reporter noted last month.
Another prospective summer winner, Guan Hu's The Eight Hundred, was withdrawn before a planned July 5 premiere. It was anticipated to be a crowd-pleaser and a critical success that could help restore momentum for local fare.
Amid the dearth of hits, China's box-office sales fell 3.6 per cent in the first half of this year, led by declines in demand for films debuting outside the February Chinese New Year and this year's May 1 to 4 Labour Day holidays, according to data from Maoyan Movie and Box Office Mojo.
China's cinema market is the world's second-largest and one of the most heavily regulated.
Prime periods like big national holidays and summer are usually reserved for local fare. But when attendance dips, regulators tend to approve Hollywood blockbusters to help cinema owners pull in viewers.
For instance, Fast & Furious Presents: Hobbs & Shaw, a spin-off of a car-chase franchise that has been a huge hit in China, has been approved for summer release.
A drop in Chinese film production over the past year was the biggest contributor to the box-office decline, said Mr Lindsay Conner, a partner at Manatt, Phelps & Phillips LLP's entertainment consultancy, "largely due to the tax issues that faced a number of Chinese companies and talent over the past year, and financial limitations on production capacity that resulted".
The authorities cracked down on tax evasion last year, a sweep that led Chinese star Fan Bingbing, to retreat from public view for months.
The scandal and the government's limits on pay for performers spooked investors and slowed production at studios to meet increasing demand.
Censorship is also prompting film-makers to rely heavily on formula-driven movies that may lack appeal, said Mr Tommie Curran, executive producer at Bricklayer Productions and former director of production at Wanda Studios Qingdao. The year will probably end flat or a "small percentage" down from last year.
"A case of too-much-of-the-same isn't encouraging current cinema-goers," he said.
BLOOMBERG
