China has announced a moderate reduction in the number of U.S. films it will import, a move that triggered a notable market reaction and brought renewed attention to the shifting dynamics of Hollywood’s global influence.

The National Film Administration characterized the decision not as a restriction, but as a rational adjustment aligned with evolving market demands. This shift underscores how significantly the landscape has changed since the 1990s, when U.S. films held dominant sway in China’s cinemas.

Rise and Decline of U.S. Film Dominance

The entry of “revenue-sharing films” in 1994 marked a turning point, allowing U.S. studios to claim a share of box office earnings in China. Films like Titanic (1998), which grossed 360 million yuan (approximately $49 million), cemented Hollywood’s early influence.

Following China’s accession to the World Trade Organization in 2001, access expanded further. The annual quota for revenue-sharing imports rose to 34 films, and the profit-sharing ratio climbed to 25 percent, opening a lucrative path for U.S. studios.

However, the past decade has brought significant change. Domestic productions such as The Wandering Earth, Wolf Warrior, and Ne Zha have gained ground with audiences, fueled by local themes and growing technical sophistication.

In 2019, Chinese films captured 64 percent of the domestic box office, overtaking Hollywood for the first time. The shift in audience preferences has been pronounced. While interest in U.S. films remains, many recent offerings have failed to connect.

Creative Stagnation and Market Response

In 2024, several high-profile Hollywood releases underperformed in China. Franchise films like Snow White and Captain America: Brave New World failed to meet expectations both commercially and critically. On Douban, a popular film review platform in China, average scores for U.S. films dropped below 6, reflecting a 1.2-point decline from the previous year.

Some observers suggest that many of these films relied too heavily on established formulas and lacked innovation. Despite favorable import policies, they failed to draw audiences or generate meaningful returns.

In contrast, select titles continue to resonate. Alien: Romulus performed strongly in China, grossing 786 million yuan and surpassing its North American earnings—underscoring that well-produced foreign films can still thrive in the Chinese market.

Economic Implications

The potential impact on Hollywood is considerable. Industry analysts estimate that increased taxation and reduced quotas could shrink the profit-sharing ratio for U.S. studios from 25 percent to just 8 percent. This would substantially narrow the margin for foreign films to succeed, effectively filtering out lower-quality productions.

Stock markets reflected the unease. On April 10, the day the new policy was announced, shares of major U.S. studios fell sharply—Disney dropped 6.79 percent, and Warner Bros. Discovery fell 12.53 percent—indicating investor concern over revenue vulnerability in international markets. China currently represents about 18 percent of Hollywood’s overseas income, far more than other regions.

European Film Industry Eyes Opportunity

The reduction in U.S. imports could open the door for greater international diversification. European studios, in particular, are showing increased interest. Spain appears to be moving swiftly; on April 11, Prime Minister Pedro Sánchez signed a memorandum of understanding to expand cooperation in film production and distribution with China.

China’s film authority reiterated that the country remains open to global cinema. “China is the world’s second-largest film market. We remain committed to high-level opening-up, importing outstanding films from more countries to meet market demands,” the administration said in a statement.

This suggests that rather than pulling back from global engagement, China is refining its criteria—favoring quality and diversity over volume. The latest policy change may therefore reshape not just trade in film, but also the global cultural landscape.