Declining influence of U.S. films in the world's second-largest market

China, home to the world's second-largest film market, announced Thursday that it will moderately reduce the imports of U.S. films.

"The U.S. government's abuse of tariffs against China will inevitably lead to a further decline in the favorable perception of U.S. films among the Chinese audience," the China Film Administration said in an online statement. "We will adhere to the law of the market and respect the choices of the audience, and moderately reduce the number of U.S. films imported."

The announcement appears to have had an immediate impact on investor sentiment. On April 10, shares of major studios including Walt Disney and Warner Bros. Discovery plunged by 6.79 percent and 12.53 percent respectively.

Despite China's continuing position as a global box office powerhouse – ranking just behind North America – Hollywood films have recently struggled to make a significant impact in the country.

In previous years, imported movies consistently dominated China's box office. However, audience preferences have begun to shift. Recent titles such as "Captain America: Brave New World" have struggled to make an impact – after 57 days in theaters, the film has earned just over 100 million yuan (about $13.8 million) and holds a rating of 5.0 out of 10 on Douban, China's leading film review platform.

Part of this shift can be attributed to the rise of Chinese cinema. Data from the China Film Administration shows a consistent dominance of Chinese productions in the past three years.

In 2024, Chinese films accounted for 78.68 percent of the country's total box office, with 55 out of 79 films that grossed over 100 million yuan being homegrown. This follows a strong showing in 2023, when domestic titles made up 83.77 percent of the market, and in 2022, when they held 84.85 percent.

Chinese films have made significant strides in both storytelling and production value, aligning more closely with audience expectations.

China's animation blockbuster "Ne Zha 2" has not only enjoyed success in its own country but also ranked among the top 20 grossing films in the U.S. and Canada so far this year. Globally, the film has surpassed $2.15 billion in box office revenue, according to Chinese movie data platform Maoyan, placing it fifth in the all-time global rankings.