Confucius (the Movie) and Trade Protectionism

A year ago, I came across a rather amusing New York Times article regarding China's film policies. The article reported that Chinese authorities removed the Hollywood sci-fi film Avatar from their theaters to ensure the box office success of domestic productions such as Confucius (starring Chow Yun-fat as the eponymous sagely philosopher). This is common practice in China. China only allows 20 foreign films into the country every year, and usually limits their screenings to 10 days.

It's therefore no surprise that Hollywood wasn't amused. In fact, the United States has taken this issue up to the World Trade Organization's Dispute Settlement Body, arguing that China's film policies violate international trade law. The WTO has ruled in the U.S.'s favor.

According to an article by Professor Stanley Lubman of Berkeley Law, China argued that it had the right to set import quotas under Article XX(a) of the General Agreement on Tariffs and Trade, which condones trade protections designed to "protect public morals". The WTO accepted this argument, but decided that China's way of executing its trade policies -- in which the importation of foreign films is controlled by 2 state-owned companies -- is unacceptable. If China doesn't comply with the WTO's ruling, the United States can impose retaliatory trade measures on Chinese exports.

Professor Lubman implied that China's concern with "public morals" has to do with the government's stance on politically touchy views. I would, however, like to point out several other possible motivations behind China's policies:

(1) Industrial Policy: Cinema is an industry that China believes has substantial export potential. It may therefore decide that it wants domestic films to thrive under trade protection while it preps the industry to compete globally.

(2) National Pride: China may believe that it's necessary to protect products that are emblematic of its national culture from international competition. And what's more Chinese than a film about Confucius?

(3) Soft Power: Combine the previous two points and we arrive at another insight. As a 2010 Guardian article points out, movies can serve as a major soft power resource, and a film industry that can compete internationally can generate substantial soft power. Exporting culturally-rich movies like Confucius can lead to international influence -- provided that they can compete toe-to-toe with the next James Cameron flick.