China is now world's second largest moviegoing market

Related: Mayor Villaraigosa off to China to promote business

Movies are bigger than ever.

At least, they are in China.

The nation of 1.35 billion became the second largest filmgoing market on the planet last year, its box office receipts of $2.7 billion muscling out Japan from that spot. That was a whopping 36 percent higher than the 2011 ticket sales in the People's Republic, and China is expected to take the top attendance position from North America by 2020.

Theaters are expanding in the world's most populous nation at an astonishing rate. China Film Group, the government-owned entity responsible for most things cinematic there, estimates that some 10 screens are added each day to the nearly 15,000 already in operation.

An expanding middle class, demand for leisure activity and a loosening of the Communist government's restrictions on movie content and imports are all factors fueling the growth. And Hollywood, of course, has taken notice. From pushing for more American films to be allowed into the country to teaming up with Chinese co-producers, to staging flashy, star-heavy premieres in Beijing, U.S. studios are doing all they can to exploit the most lucrative new profit center to come along since DVDs.

"China is an incredibly important market nowadays for all films, and particularly for Hollywood films," noted Kevin Feige, Marvel Studios' president. "All of the Marvel movies have progressively done better and better there. "

Indeed, Marvel's latest release, "Iron Man 3," enjoyed the biggest opening ever in China earlier this month. Not coincidentally, Sino versions of the superhero sequel contain special footage shot in China with Chinese actors.

Things like that represent an increasing trend, either to make movies more appealing to the vast Chinese audience or to help qualify films as co-productions, which aren't subject to the 34-per-year quota Beijing places on foreign movie imports. Last year's hit sci-fi thriller "Looper," set locations originally scripted for France in Shanghai. And the fourth "Transformers" movie will film partially in China to qualify as a co-production and recently added the nation's most popular actress, Li Bingbing, to its cast.

Small stuff in the overall picture of international filmmaking. Some, however, are concerned that increased Hollywood catering to the Chinese market could have a wider, pernicious effect on American cinema.

"It's going to do a lot of things to the content of American films," predicted Lynda Obst, producer of such films as "Sleepless in Seattle" and "How to Lose a Guy in 10 Days." "First of all, because the new quota that was negotiated allows only 3-D and IMAX movies, obviously we're going to be making more 3-D and IMAX movies. They only want our blockbusters, so this franchise machine that we've seen is vividly encouraged by the increasing prominence of the Chinese market. "

Obst refers to the 2012 foreign film quota increase from 20 per annum to 34, which restricts the additional 14 imports to those high-tech formats. Those are the most popular movies among the Chinese, as they are with American and most worldwide audiences.

"It's going to discourage making comedies and dramas in the studio system, all movies that aren't gigantic action movies," continued Obst, whose new nonfiction book "Sleepless in Hollywood: Tales from the New Abnormal in the Movie Business" contains a section on China and comes out June 11. "Wit, nuance, drama, things that don't have pertinence to the Chinese audience - or they may, but we'll never find out because they're discouraged from being put into production - are thought to not play abroad because senses of humor are local. So, so-called writing is secondary to gigantic explosions. It squeezes out the original movie. "

Getting Picked is Tough

While foreign films that don't make the quota can be shown in China, if they're not co-productions they have to be sold to a Chinese distributor for a flat fee. Producers who want a percentage of Chinese box office receipts have to go for a quota slot.

Beside being a distributor, exhibitor, production, and co-production entity, China Film Group decides which foreign films make the quota cut through a subsidiary.

"The films are chosen on a case-by-case basis," Joseph Shuster, the U.S. representative for China Film Group's Los Angeles office, explained in an e-mail. "Our China Film Import & Export Co. selects the films that will be given a revenue-sharing quota spot, and they typically select big-budget blockbuster movies. "

Another content-related concern, of course, is that China has government censorship. Earlier this year, "Django Unchained" was yanked from theaters on the eve of its Chinese debut. The State Administration of Radio, Film, and Television, which is a separate organization from CFG, claimed that the cut of Quentin Tarantino's ultra-violent, occasional nudity-displaying Western was not the one it approved, and the version that was passed has since been released in China.

Such films as "The Karate Kid" and "Cloud Atlas" were substantially altered before they could open in China. In perhaps the most bizarre act of trying to please Beijing, the remake of "Red Dawn," which was originally about a Chinese invasion of the USA, was implausibly about a North Korean occupation of America when it got released - here!

"For Chinese filmmakers and for American filmmakers, what the government has done is really quite clever," observed Clayton Dube, executive director of the University of Southern California's U.S.-China Institute and the host of numerous film-related programs between the two nations. "There are some bright red lines that you know you must not cross, and those involve graphic portrayals of sex and things like that, but also things focused on major human rights issues, major contentious issues in China. Those kinds of things are fairly clear; there's no hope for a film that focuses on events in 1989 in Beijing.

"What they've done, though, is create a climate where filmmakers spend a lot of time trying to guess at what might cause the censors to intervene, and this causes them to engage in an elaborate self-censorship," Dube continued, speaking by Skype from China. "Instead of beginning from how can we best convey this point, what makes this most compelling for audiences and most effective in telling the story, they have to say, 'Will this upset somebody?' "

Then again, Hollywood creative types have long been forced by studios, producers, the MPAA ratings administration and 1,001 market considerations to think that way anyhow.

Peter Shiao, a Taiwan-born, American-raised producer and financier who does co-productions with China through his L.A.-based Orb Media Group, suggested common sense and humanity was the path around censorship problems.

"I don't think it's insurmountable, said Shiao, who also chairs the annual U.S.-China Film Summit. "It is insurmountable if you absolutely need to make a movie about Mao Zedong the way you see him versus the way they see him. There are some clear black-and-whites where you're just not going to win. More often than not, though, there is enough of a gray area/middle ground where, if you can establish some level of rapport and trust, then it's very possible to make a movie in this new world order. "

Perhaps a more important consideration for Hollywood filmmakers is the general sensibility of the Chinese audience.

"As you know, every major Hollywood movie has to have villains," Shiao pointed out. "For a long time, making the villains Chinese was in the range of possibility. But now that China has clearly emerged as the world's second-largest film market everybody who cares about making money from their movies has to think long and hard about depicting the Chinese in a way that would be offensive to the Chinese moviegoing public. "

Considering Hollywood's track record when it comes to depicting Asian cultures and individuals, that hardly seems like a bad thing. And whether or not they have yuan on the brain, some filmmakers are thinking about how to avoid negative stereotypes.

Take the Mandarin. Back when he was introduced in Marvel Comics in the 1960s, the villain was purely evil and half Chinese. As he's played by Ben Kingsley in "Iron Man 3," the Mandarin is not only not so wicked, but ethnically unidentifiable.

"If there was no money business in China, we wouldn't have done the Fu Manchu version of the Manadrin anyway," said Marvel's Feige. "It's a very, very outdated caricature. "

USC's Dube said in that respect, sensitivity to Chinese economic concerns has at times resulted in better, more accurate cultural portrayals in film.

"I am not in any way in favor of censorship," Dube said. "I am certainly, though, in favor of greater sensitivity in American storytelling about China and about everyplace. Everything that gets us beyond stereotypes gets us closer to portraying reality, and the reality in China is quite complex. " @bscritic on Twitter