UPDATE, Monday, 9:58 AM: President-elect Donald Trump spoke with China’s president Xi Jinping on Monday during a call in which Xi told his future U.S. counterpart that “cooperation is the only correct choice for China-U.S. relations.” Official media is reporting that Xi told Trump, “I attach great importance to China-U.S. relations and am ready to work with the U.S. side to carry forward bilateral ties and to better benefit the two peoples and the rest of the world.”
Around the same time, the Communist Party-controlled The Global Times lashed out at some of Trump’s comments from the campaign trail. “If he does list China as a currency manipulator and slap steep tariffs on Chinese imports, China will take countermeasures,” an editorial said. As we reported below, Trump has talked about levying a 45% tariff on Chinese imports.
Should he move forward with such a plan, however, The Global Times declared that China will “take a tit-for-tat approach” and warned that Boeing orders would “be replaced by Airbus” while “U.S. auto and iPhone sales in China will suffer a setback.”
“Trump as a shrewd businessman will not be so naïve,” to launch an all-out trade war, said the paper. But if he “wrecks Sino-U.S. trade, a number of U.S. industries will be impaired. Finally the new president will be condemned for his recklessness, ignorance and incompetence and bear all the consequences.”
The Communist Party mouthpiece then added, “We are very suspicious the trade-war scenario is a trap set up by some American media to trip up the new president.”
How this tenuous relationship might play out for those in Hollywood is a real question.
PREVIOUS, NOVEMBER 9 PM: Given the rhetoric Donald Trump has spoken during his campaign about China – famously lampooned as “Jina” – there is some cause for concern about how his policies will line up with a Hollywood industry that has grown increasingly tantalized by money from the Middle Kingdom.
Not only has Trump been vocalizing his interest in levying a 45% tariff on Chinese imports, he is now in the party of power of the Senate and House in D.C. — the Republicans, which have been raising red flags on Chinese investment in the entertainment industry. Also, he famously once said that climate change was a hoax perpetrated by the Chinese.
The new president-elect also has pointed the finger at China for taking away America’s power and jobs and has vowed to change things. Trump also has said that he would make Apple build their phones not in China but in America.
So what does that mean for the entertainment industry?
Trump’s rise to power comes only a week after many of the top executives in China descended on Los Angeles for a week of Chinese/U.S. Summits panels. When asked repeatedly about the upcoming elections all the Chinese executives kept characteristically mum.
One exec said today that those in the Chinese industry actually “like Trump since he is business focused. The sentiment is that Hillary Clinton is a war hawk and very aggressive about China’s position in the South China Sea.” But he added: “Trump will definitely clamp down on Wanda and others investing in Hollywood. That is for sure.”
Chinese conglom Dalian Wanda has been been buying up U.S. entertainment properties, most recently dick clark productions for about $1B. It also has amassed 75% of AMC Entertainment Holdings, bought Legendary Entertainment and is on the prowl for a studio to acquire.
Wanda CEO Wang Jianlin is one of China’s richest businessmen, with an estimated worth of $32 billion. Like Trump, he also is a major real estate developer and has developments in many second- and third-tier cities in China. However, he’s doubtful that Trump has used shell companies to buy that real estate the way the Chinese have in this country. In fact, the Chinese for years have been buying up real estate in major cities, including many buildings in downtown Los Angeles.
Wanda also is building an $8.2 billion Qingdao Oriental Movie Metropolis, which should open by August 2018. The sprawling, 1,200-plus acre site includes a film studio and theme park as well as a 4,000-room resort/hotel, a shopping mall, an entertainment center, condos, a conference center, a yacht club, a hospital and even a celebrity wax museum.
Wanda Group and the Qingdao municipal government are trying to lure Hollywood film production halfway around the world to shoot there by offering up a film and television industry development fund worth $750M and a rebate of 40% on everything from stage rental, set construction and equipment rental to accommodations, transportation and postproduction. It is building out 30 soundstages, a 56,000-square-foot greenscreen stage, a temperature-controlled underwater stage — and even a New York street (you know, in case filmmakers don’t want to shoot in New York or go to Paramount or Fox and just really have a hankering to travel 13 hours to China).
But Wanda is not alone. Many companies from China — Tencent, Alibaba, Huayi Brothers, Honi — are invested in American entertainment companies right now.
Peter Navarro, a professor of economics and public policy at Paul Merage School of Business at UC Irvine, who also is an adviser to Trump, has written several books about China and American interests. One is called Death by China and another is The Coming China Wars. He, like Trump, sees China as a threat to be reckoned with.
Experts on China/American relations and who understand the entertainment industry say it’s just too early to tell what will happen. “I don’t think even Trump knows at this point,” said one exec with ties to China.
Stanley Rosen, USC political science professor specializing in China who is also on the advisory board of the Chinese American Film Festival, said he doesn’t see an immediate impact. “If Trump were to follow through on some of his tax proposals, it would at a minimum bring back a lot of offshore money to the U.S., thereby strengthening the American dollar and depressing the Chinese currency to a certain extent,” he said. “That should lead either to more Chinese money leaving China to escape the devaluation or less Chinese money invested in Hollywood because it would take more of it to buy whatever they wanted to buy. It would depend, of course, on how much they already have in U.S. dollars vs. RMB.”
He said: “In short, it’s really too early to tell what this will mean. Trump has had a history of going back and forth on policy as it suited his business interests. He ‘loved’ the Clintons when Bill was in power and Trump was a Democrat, and he doesn’t agree with a good deal of standard Republican policy, so it’s hard to predict what he will do. I think it most likely that he would forge an alliance across party lines, which will be needed to fund his massive infrastructure projects, among other campaign promises. In the end, Hollywood will continue to do business with anyone.”