By Brian R. Byrne* A pdf version of this article may be downloaded here. I. Introduction For U.S. filmmakers, the People’s Republic of China represents a prodigious market opportunity.[FN1] As the Chinese middle-class expands,[FN2] enjoying an increase in disposable income,[FN3] the thirst for quality entertainment intensifies.[FN4] Cinema construction rampages across the mainland in an effort to satisfy demand for theatrical releases.[FN5] Yet despite this consumer demand,[FN6] supply methodology remains a perplexing phenomenon. True exploitation of the market is simply chimerical due to an obstinate web of import quotas, censorship, and government intervention, all founded upon a guise of cultural protectionism.[FN7] However, notwithstanding the obstacles to legitimate distribution, the channels of illegitimate distribution remain relatively unencumbered. Piracy is rampant throughout China[FN8] and high quality copies of pirated films are widely available, often before the film in question has even been released through lawful channels. Moreover, in contrast to lawful distribution, pirates are subject to neither an import quota nor the rigorous censorship regime that would otherwise apply.[FN9] Thus, China appears to offer a distinct advantage to illegitimate market players. Unsurprisingly, this regime has caused diplomatic unrest,[FN10] souring, in particular, China’s relationship with the United States. In 2007, the U.S. initiated two WTO proceedings against China, one regarding insufficient protection of intellectual property,[FN11] and the other complaining of insufficient market access.[FN12] In both instances, the Panels made rulings adverse to China. In the aftermath of these decisions, China faces deep scrutiny from the international community and an expectation that the necessary reforms will be implemented. This paper will not serve to deconstruct the WTO rulings. Rather, I will argue that: (i) China’s authoritarian approach to film distribution, coupled with its deficient intellectual property regime, actually promotes the dissemination of Western culture within its borders – a direct perversion of its intentions; and (ii) in order to achieve its cultural objectives, China must undertake a number of key reforms. II. Film Distribution in China and the Control of Culture Before proposing a new market structure, I will examine the structure currently in place, emphasizing the market valves and barriers that China has implemented to maintain cultural oversight. The system for distributing U.S. films in China has been described as “among the most burdensome and restrictive in the world.”[FN13] In order to release a film in Chinese theaters, foreign studios must overcome a number of significant obstacles, each one carrying the potential to reduce or even eviscerate potential profits. After analyzing each of these impediments, I will turn to the perverse result of this structure. (a) Importation and Distribution The theatrical release of foreign films in China is heavily restricted and state-governed. Regulatory oversight is vested in China’s State Administration on Radio, Film and Television (the SARFT).[FN14] Only twenty foreign films – both U.S. and non – may be imported into China annually,[FN15] and importation can only be conducted by film import enterprises designated or approved by the SARFT.[FN16] Currently, there is only one entity approved to import films: the China Film Import and Export Corporation, a wholly state-owned entity.[FN17] Following importation of their films, U.S. studios must secure a distributor. In its submissions to the WTO, the U.S. made the following allegations about the system of distributing films for theatrical release in China: distribution can only occur through one of two Chinese state-controlled distributors;[FN18] both members of the distribution duopoly[FN19] use identical form contracts and do not permit negotiation of key terms;[FN20] China Film Group actually decides on the distributor and distribution conditions for all imported films;[FN21] this distribution regime facing U.S. films contrasts starkly with the open distribution system available for domestic films, as Chinese films may be distributed by their production studios, or a full range of film distributors in China, with terms being negotiated commercially and competitively.[FN22] Thus, China maintains a high barrier for the importation and distribution of foreign films. It intends this barrier to facilitate trade protectionism and function as a cultural filtration device, limiting the number of foreign films to which Chinese citizens are exposed. (b) Censorship Censorship in China is extensive and disquieting.[FN23] The current Internet crisis serves as a cautionary tale for both free speech advocates and expansionist capitalists.[FN24] For the U.S. film industry, the ominous specter of Chinese censorship is just as perturbing and no less commercially disruptive.[FN25] All films imported into China must pass the strict scrutiny of censors,[FN26] but because the country lacks a film rating system and censors can interpret the censorship guidelines in a number of different ways, the process is very unpredictable.[FN27] This creates problems for U.S. studios that would like to pre-censor their films to avoid delays.[FN28] A lamentable dilemma faces U.S. film executives in this regard. To ensure a quicker grant of censorship approval, the studios could adopt an overly cautious approach and remove all potentially condemnable material. This approach, however, may unnecessarily reduce the artistic quality and commercial appeal of the picture if, in reality, censors would not have objected to the removed content. On the other hand, the studios could take a less cautious approach and remove only that material that the censors are most likely to flag. The risk associated with this strategy is that censors may object to content “left in,” causing censorship delays and resulting in significant commercial harm to the film.[FN29] China’s rigorous system of censorship unquestionably highlights the government’s commitment to control the flow of cultural inputs in the market. Essentially, a censorship wall has been created to act as a second barrier to the entry of foreign films. However, a key difference between censorship and the import quota is that both the U.S. film industry and the Chinese film industry must overcome the censorship barrier. (c) Blackout Periods Periodically, China institutes cultural “blackout” periods, during which foreign films cannot be shown in theaters.[FN30] Asian media reports that imported films are subject to removal at any time the government decides to hold an “impromptu film festival.”[FN31] Although this indicates a lack of predictability, reports suggest that there is one annual period during which foreign films are “routinely barred from screening.”[FN32] This period occurs during July, coinciding with the school summer holidays. Naturally, this inflicts significant losses on summer blockbusters.[FN33] It would be naïve to disregard the protectionist nature of blackout periods, considering the boost given to domestic films at the expense of American films. They are certainly designed to “make room for domestic Chinese films during peak summer viewing days.”[FN34] However, they are not confined to summer and may occur numerous times during the year, spontaneously and suddenly.[FN35] For this reason it has been suggested that the Chinese authorities pull films that do “too well” at the box office.[FN36] In addition to economic concerns, blackout dates are heavily focused – ostensibly, at least – on cultural management. The Chinese government is attempting to fence out the Hollywood influence at key times of the year – most notably, at those times when the malleability of youth is exposed and vulnerable. III. Insufficient IP Enforcement and the Dissemination of Western Culture Within China Piracy is pervasive throughout China.[FN37] IP enforcement is so deficient that some U.S. studios see only two options for commercial viability: compete with pirates on price, or convert pirates to legitimate retailers.[FN38] However, underlying the pervasiveness of piracy is a relatively straightforward market dynamic: because lawful supply cannot meet demand, unlawful supply takes its place.[FN39] The Motion Picture Association of America enunciates fiercely that the current import quota of twenty films per year falls far short of market demand for “primarily American films.”[FN40] Many commentators argue that when consumers are unable to purchase products in the open market, they “may settle for black market products or pirated goods.”[FN41] Thus, in the “large and hungry”[FN42] Chinese market, consumers who wish to see certain movies that are unavailable through legitimate channels have little choice but to purchase unlicensed copies.[FN43] Those unlicensed copies are facilitated by the lack of robust IP enforcement. We can assume that the import quota serves two goals: limiting the influx of Western culture presented in U.S. films, and protecting the domestic film industry.[FN44] Aside from the economic objective associated with the latter goal, both goals share the same underlying cultural objective: preserve and promote Chinese culture at the expense of Western culture. Yet the import quota, without adequate IP enforcement, is producing a result that is directly perverse to this purpose. Uncensored, pirated copies of U.S. films are widely available on the streets of China at a price far lower than the admission to a movie theater.[FN45] This is without question a widespread dissemination of Western culture, fostered by a lack of commitment on the part of the Chinese government to eradicate piracy. If the Chinese government increased the number of foreign films imported into China, it would satisfy some of the market demand for U.S. films and reduce some of the demand for pirated films, thereby limiting the dissemination of Western culture and helping China achieve its cultural objectives. Analyzing the intersection between piracy and inadequate lawful supply necessarily encompasses more than a mere discussion of the import quota. Censorship also plays three fundamental roles in fostering piracy. Firstly, Chinese censorship authorities are often slow in approving U.S. films, and this can give pirates a significant head start on reaching the market.[FN46]Secondly, Chinese legislation denies copyright protection to films that have not yet been approved by censors.[FN47] Thus, while a film is awaiting approval, pirates can operate without fear of legal sanction. Finally, the content of pirated films has typically not been subjected to censorship.[FN48]Therefore, pirates are actually in a position to offer a product, which may be more desirable to consumers than a legitimate copy. The cultural blackout periods referred to earlier also act as an acute constraint on lawful supply, creating a void for pirates to fill. During these periods, pirates operate without competition, which inflicts a particularly severe commercial detriment to U.S. film studios, especially in light of their tendency to release summer blockbusters simultaneously across the globe.[FN49] Thus, rampant piracy of U.S. films in China clearly nullifies the government’s cultural input barriers. The import quota, censorship and blackout dates actually provoke an injection of U.S. culture into the market. IV. Reform Proposal In light of the foregoing, China should implement the following reforms in order to achieve its cultural objectives. A consequential benefit will accrue insofar as these reforms may help remedy some of the complaints raised by the U.S. at the WTO.[FN50] Although the reforms outlined below may not offer a complete formalistic resolve to China’s WTO obligations, the reforms will benefit U.S. filmmakers, and this should help mitigate the current adversarial guise of U.S.-Sino relations. (a) Strengthen IP Enforcement By eradicating piracy to the greatest extent possible, China will limit the dissemination of uncensored U.S. films and thereby further its cultural objectives. Furthermore, China’s own film industry will benefit from increased revenues, and this is especially important for domestic films, which have enjoyed extensive government promotion.[FN51] Typically, piracy diverts these government funds away from the official channel of revenue receipt. Without piracy, however, the funds would remain in official channels and could thus be used to strengthen the domestic film industry in a manner consistent with the government’s desired cultural trajectory. (b) Increase the Import Quota Increasing lawful supply is a necessary corollary to eradicating piracy. It is essential that China reduce incentives to pirate by the greatest degree possible. If consumers have greater lawful access to U.S. films, they may be dissuaded from purchasing pirated DVDs of the same films. If, simultaneously, punishment for piracy is real and exorbitant, the risk-reward ratio of piracy may become so high as to act as a substantial deterrent. In addition to helping reduce piracy, increasing the import quota may lead to increased domestic cinema construction, which itself may benefit the domestic film industry.[FN52] Naturally, China should strive for a balance between the number of films imported, piracy reduction, and benefits to the domestic industry. After all, flooding the market with U.S. films would not achieve its cultural objectives. However, increasing the number of imports would. The benefit of legitimate importation over piracy is that China retains censorship control. (c) Reduce Censorship Delays As I have already discussed, delays in censorship approval can give pirates a significant lead-time to reach the market. Thus, in conjunction with an increased import quota, China should invest in its censorship infrastructure in two ways: firstly, it must increase efficiency by decreasing the processing time for approval of imported films; secondly, it must increase transparency so that U.S. film companies can pre-censor their material. Releasing a film on the same date globally is an effective means of limiting piracy. It is therefore vital to China’s interests that its censors are not the weak link in an otherwise industrious chain of effort that makes the simultaneous release possible. Censorship will be the most fundamental valve for China to control cultural direction, and it is also the least destructive to the commercial interests of U.S. filmmakers. However, China should strive to keep the level of censorship within the bounds of consumer acceptability. Otherwise, pirates may be inspired to capitalize on consumer demand for uncensored versions of the films. (d) Relax Restrictions on the Domestic Film Industry Ultimately, as China’s middle class grows, entertainment will only increase in importance. The demand for foreign films is currently fuelled, in part, by the perceived superiority of U.S. filmmakers and their ability to entertain an audience.[FN53] Although the Chinese film industry has made great advances, government authorities must allow Chinese artists greater freedom[FN54] to promote greater competition between domestic artists and the cultural influences of imported entertainment. Similar to import quotas, Chinese authorities must strive to achieve the optimum balance between fostering a competitive domestic industry and not sacrificing their fundamental cultural objectives. In other words, the government need not lift all restrictions currently placed on Chinese filmmakers. Instead, it must only relax restrictions to the point that the cultural benefits of a truly competitive domestic industry outweigh the perceived negative cultural effects of forfeiting a degree of control over the industry. V. Current Market Structure On the left side of the chart above, I have depicted China’s barriers intended to control cultural inputs. The U.S. film industry must overcome two barriers to entry: the import quota and censorship. Only some U.S. films pass through both barriers and reach the Chinese market. Naturally, China’s own film industry must not overcome the import quota; however, it must still contend with censorship. Although China seems concerned with filtering cultural inputs on the left side of the chart, the right side of the chart shows the glaring deficiency due to insufficient IP enforcement. Piracy allows vast quantities of uncensored U.S. culture into the market, while extracting significant revenue owed to the U.S. industry (leading to political and legal tensions). Piracy of Chinese films extracts revenue from the market that would otherwise strengthen the Chinese film industry. VI. Proposed Market Structure The chart above represents the proposed market structure. Allowing more U.S. films to legitimately enter the market would increase U.S. cultural input; however, China could still rely on the censorship barrier as a cultural valve. Relaxing censorship constraints on the Chinese film industry would strengthen the industry and increase its cultural input. On the right side of the chart is a representation of increased IP enforcement. China benefits in two ways: first, there is a reduction in uncensored U.S. films entering the market, and therefore a reduction in uncontrolled cultural input; second, revenue owed to the Chinese film industry stays within official channels, which strengthens the domestic industry. VII. Conclusion The U.S.-China acrimony, engendered by China’s current state-of-play for intellectual property holders, has attracted a saturating volume of legal scholarship. Understandably, the majority of this commentary[FN55] champions Western pressure on China, via the WTO and other channels. Clearly, this approach has proved extremely fruitful recently, in light of U.S. success at the WTO. Without question, these rulings provide a platform to reform the status quo in China. However, I propose that the U.S. should seek to supplement the WTO rulings with Chinese-orientated incentives that simultaneously benefit U.S. interests.[FN56] In order for China to achieve its cultural objectives, it must reform its current regime. One might contend that this argument, taken to the extreme, would simply result in China banning the import of all foreign films, while simultaneously cracking down on piracy. Yet this would not be in China’s best interests. Due to its regulatory control of the revenue sharing mechanism, China stands to profit greatly from the legitimate exhibition of foreign films. Also, it is arguable that China’s economic success heavily depends on at least a modicum of contentment among the middle class workforce. Given the high demand for U.S. films from this constituency, a total ban on foreign imports may be a treacherous move for the government. My proposals reflect an endorsement of cultural regulation; if implemented, the new market structure would inevitably restrict the dissemination of information throughout China. In light of this, the U.S. film industry may be hesitant to pursue the type of argument presented in this paper, for fear of allegations of cynicism. Nonetheless, I believe my position can be defended on two fundamental grounds. The first ground concerns the issue of sovereignty. Put simply, China has a right to define the contours of its culture. As recognized by the WTO, “the protection of public morals is a highly important governmental interest.”[FN57] Therefore, in seeking to resolve their grievances, U.S. IP holders cannot, and should not, interfere with China’s cultural progression, other than to monetize their creative output and vigorously enforce their property rights. U.S. filmmakers need not be expected to sustain altruistically the plight of piracy in order to maintain a cultural interchange, which is contrary to the policy of a sovereign nation. The second ground of defense centers directly on property rights. Respect for the ownership of private property is a bedrock principle of U.S. policy. Meanwhile, the current regime in China evidences disregard for the property rights of U.S. copyright holders. It may be true that a beneficial side effect of this market structure is that Chinese citizens enjoy greater exposure to unfiltered expression. However, this exposure comes at great cost. The foundations of this cultural influence rest on piracy, an enterprise that flies in the face of private property rights. In persuading the Chinese authorities to exercise greater control of cultural influence, the U.S. film industry would be indirectly raising the status of private property ownership throughout China. From a U.S. perspective, the idea of private property ownership is arguably a cultural export of at least equal significance to free speech. Therefore, I believe that it is thoroughly appropriate to advance the market reforms proposed herein, as the result will accord with U.S. policy. In summation, the adage of “change must come from within” is robust and time honored for a reason. If Chinese authorities are not ready to embrace the trappings of Western culture, then so be it. The pursuit of free expression does not necessarily correlate to the interests of intellectual property holders.[FN58]Nonetheless this should not deter filmmakers from pursuing legitimate revenue that stands to be extracted from the market. The U.S. film industry can increase its profits in China without demanding that Chinese authorities cease their control of cultural development. Each objective can co-exist and the reforms mentioned above should help satisfy both parties. All that remains now is to convince China. * Brian R. Byrne practices EU competition law in Brussels. He is a graduate of University College Dublin (B.C.L. 2007) and New York University School of Law (LL.M. 2010). He is a member of the New York Bar and an Irish solicitor. [FN1] Chinese box office sales reached $907 million in 2009, representing a 42 percent growth in the sector. See Zhang Yimou: China Needs More Cinemas, Beijing Review, Mar. 8 2010, available at http://www.bjreview.com.cn/movies/txt/2010-03/08/content_252286.htm. [FN2] See Wayne M. Morrison, Cong. Research Serv., RL 33536, China-US Trade Issues 1 (2009). [FN3] For a detailed economic analysis of the Chinese middle class’ spending power, see Diana Farrell et al, The Value of China’s Emerging Middle Class,McKinsey Quarterly, Spec. Ed. 2006, at 60, 69. [FN4] See Patrick H. Hu, Mickey Mouse in China: Legal and Cultural Implications in Protecting U.S. Copyrights, 14 B.U. Int’l L.J. 81, 92 (1996). [FN5] It has been reported that 626 screens were added last year bringing China’s screen total to 4,723 by the end of 2009. This represents an increase of 13 percent. Ding Wenlei, Building China’s Hollywood, Beijing Review, Feb. 18, 2010, available at http://www.bjreview.com.cn/business/txt/2010-02/11/content_246761.htm. [FN6] Acclaimed Chinese director Zhang Yimou recently proposed to the Chinese People’s Political Consultative Conference (CPPCC) that more cinemas should be built in smaller towns and cities to satisfy demand. Zhang Yimou: China Needs More Cinemas, supra note 1. [FN7] See Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, ¶ 7.709, WT/DS363/R (Aug. 12, 2009). [FN8] Some reports indicate that 95 percent of all movies sold in China are pirated. See Frank Lin, Piracy in China: Identifying the Problem and Implementing Solutions, 14 Currents: Int’l Trade L. J. 83, 89 (2005). Others indicate a rate of 90 percent. See Kevin Lee, The Little State Department: Hollywood and the MPAA’s Influence on U.S. Trade Relations, 28. Nw. J. Int’l L. & Bus. 371, 389 (2008). [FN9] See Paula M. Miller, Reeling in China’s Movie Fans, China Business Review, Mar./Apr. 2007 35, 37. [FN10] Senator Chuck Schumer blasted China in the media in 2007 and hailed the WTO complaints, saying, “China has no excuse to allow American intellectual property to be ripped off without any consequences. I hope this is just the beginning of a much stronger Administration stance on China’s nonstop violations of free trade rules.” See Eric Bangeman, US Says China Isn’t Doing Enough About Piracy, Files Complaint with WTO, Ars Technica (Apr. 10, 2007), http://arstechnica.com/tech-policy/news/2007/04/us-says-china-isnt-doing-enough-about-piracy-files-complaint-with-wto.ars. [FN11] See Panel Report, China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights, WT/DS362/R (Jan. 26, 2009). [FN12] See China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, supra note 7. [FN13] Bradley S. Klapper, WTO Win Could Open China’s Doors to US Companies, Arizona Daily Sun, Aug. 12, 2009, available at http://azdailysun.com/news/article_80c41a2e-f8ce-50cd-8b7f-141ff30a9aa3.html (quoting Dan Glickman, MPAA Chairman). [FN14] See China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, supra note 7, at 84. [FN15] Lee, supra note 8, at 389. [FN16] See China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, supra note 7, at 85. [FN17] Id. at ¶ 7.575. [FN18] Id. at ¶ 7.1660. [FN19] Although the WTO Panel rejected the U.S. argument that China’s rulescreated the duopoly (either de jure or de facto), a duopoly exists in fact nonetheless. For a detailed discussion of the duopoly argument, see id. at 451-58. [FN20] Id. at ¶ 4.24. [FN21] Id. at ¶ 4.30. [FN22] Id. at ¶ 4.24, ¶ 4.30. Regarding these obstacles to distribution I have purposefully referred to the U.S. arguments, rather than the Panel Report, simply because the Panel rejected the claim of a de facto distribution duopoly. However, that rejection was founded merely upon a deficiency of evidence submitted, and does not alter the pragmatic obstacles faced by U.S. films studios seeking to release their films in Chinese cinemas. [FN23] “Virtually all print and broadcast media are government-run or supervised, and subject to censorship by Communist Party propaganda officials.” China and the WTO: Let Me Entertain You, Economist, Aug. 15, 2009, at 7. [FN24] See Google Ponders Leaving China: Failed Search, Economist, Mar. 20, 2010, at 79. Chinese authorities have also been actively shutting down websites, and blocking the registration of new domain names. See Fredrik Erixon and Hosuk Lee-Makiyama, Chinese Censorship Equals Chinese Protectionism, Wall St. J., Jan. 6, 2010, available at http://online.wsj.com/article/SB10001424052748704842604574641620942668590.html. [FN25] See Vivien Cui, Mainland release of Mission Impossible Possible, South China Morning Post, May 16, 2006, at 1. [FN26] Gerardo Lara, The Piracy of American Films in China: Why the U.S. Art Form is Not Protected by Copyright Laws in the People’s Republic of China, 2 UCLA J. Int’l L. & Foreign Aff. 343, 356 (1997-98). [FN27] See Miller, supra note 9, at 37. [FN28] Id. [FN29] The relationship between piracy and censorship delays will be examined in greater detail below. [FN30] See Lee, supra note 8, at 389. [FN31] Aventurina King, Curtains For Foreign Cinemas?, Asia Times Online, Dec. 2, 2006, available at http://www.atimes.com/atimes/China_Business/HL02Cb02.html. [FN32] Cui, supra note 25. [FN33] For example, China refused to screen Spider-Man 2, Harry Potter and the Prisoner of Azkaban, and Shrek 2 in July 2004 due to a blackout period carrying the supposed aim of encouraging “more upright pursuits” among the nation’s youth. See Carl Erik Heiberg, American Films in China: An Analysis of China’s Intellectual Property Record and Reconsideration of Cultural Trade Exceptions Amidst Rampant Piracy, 15 Minn. J. Int’l L. 219, 237 (2006). [FN34] Miller, supra note 9, at 37. [FN35] King, supra note 31. [FN36] Miller, supra note 9, at 37. One U.S. film with respect to which this allegation has been levied is The Da Vinci Code, which was scheduled for a three-week run but was pulled after it made more than $13 million dollars in China. [FN37] It is reported that 90% of all DVDs sold in China are pirated. SeeMichael C. Ellis, Report, The Cost of Motion Picture Piracy – To China, Asia and the World, available at http://www.mpaa.org/press_releases/leksummarympa.pdf (last visited Nov. 8, 2010). In 2005, the US film industry lost an estimated $2.1 billion to piracy in China. See Jordana Cornish, Cracks in the Great Wall: Why China’s Copyright Law Has Failed to Prevent Piracy of American Movies Within Its Borders, 9 Vand. J. Ent. & Tech. L. 405, 411 (2006). It is worth noting that the value of lost revenue to piracy varies according to method of calculation and figures differ. See generally Aaron Schwabach, Intellectual Property Piracy: Perception and Reality in China, The United States and Elsewhere, 2 J. Int’l Media & Ent. L. 65 (2008). [FN38] CAV Warner Home Video has started to treat pirates as competitors by lowering prices and shortening the window between theatrical release and DVD release. It also attempts “to convert stores that sell counterfeit goods into sellers of licensed DVDs.” Miller, supra note 9, at 38. [FN39] See Lara, supra note 26, at 355. [FN40] Heiberg, supra note 33, at 236 (citing testimony of Fritz E. Attaway, Executive Vice President and Wash. General Counsel, MPAA). [FN41] Peter K. Yu, Piracy, Prejudice and Perspectives: An Attempt to Use Shakespeare to Reconfigure the US-China Intellectual Property Debate, 19 B.U. Int’l L. J. 1, 31 (2001). See also Derek Dessler, China’s Intellectual Property Protection: Prospects for Achieving International Standards, 19 Fordham Int’l L. J. 181, 232 (1995) (“Commentators argue that these market access barriers facilitate intellectual property piracy”). [FN42] Heiberg, supra note 33, at 236 [FN43] Schwabach, supra note 37, at 75 n.49. [FN44] Carl Erik Heiberg makes a similar suggestion, supra note 33, at 256. [FN45] “The latest Hollywood movies are on DVDs on street corners across China within days of their release, at a cost of $1 or less.” Keith Bradsher, WTO Rules Against China’s Limits on Imports, N.Y. Times, Aug. 12, 2009, at A1. [FN46] Mission Impossible III serves as a suitable illustration of this point. The film was originally scheduled for a simultaneous release in the U.S. and China. However, because censors opined that the film depicted Shanghai as “run down” and the police force as “clumsy,” the release was, at the time, “indefinitely postponed.” Upon learning of the censorship controversy, interested moviegoers allegedly turned to illegitimate copies, which were already available on the market, rather than wait for the official outcome. Cui, supra note 25. See also Miller, supra note 9, at 37. [FN47] Morrison, supra note 2, at 18. [FN48] Miller, supra note 9, at 37. [FN49] Exploitation of such releases in China is extremely difficult because potential audiences may have had access to the pirated copy months prior to the film actually being released in theaters. [FN50] I refer to the complaints made by the U.S. against China in Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R (Dec. 21, 2009). [FN51] Examples of movies, heavily supported by the Chinese government include The Founding of a Republic and Confucius. The latter is a biopic of the ancient philosopher while the former celebrates 60 years of the People’s Republic of China and features 120 top Chinese actors. For further information on these movies, including how they were received by audiences, see Sharon LaFraniere, China’s Zeal for Avatar Crowds Out Confucius, N.Y. Times, Jan. 30, 2010, at A4 and Steven Schwankert, China Reiterates Screen Limits for Foreign Films, Film Journal International, Jan. 27, 2010, available at http://www.filmjournal.com/filmjournal/content_display/esearch/e3if8d7feafe64b6fb76023a4453148d396. [FN52] Although certainly a biased commentator, James Cameron’s recent remarks in Beijing seem logical: “opening the doors in China… will raise the entire film industry [and] raise the “Chinese filmmakers’ ability to play their films.” Gillian Wong, James Cameron: China Should Let More Movies In, ABC News Online Dec. 23, 2009, available at http://abcnews.go.com/Entertainment/wireStory?id=9407012. [FN53] See Juliet Ye, China’s Avatar Restrictions Cause a Stir, Wall St. J., Jan. 20, 2010, available at http://blogs.wsj.com/chinarealtime/2010/01/20/china%E2%80%99s-avatar-restrictions-cause-a-stir/. [FN54] In China, artistic freedom in domestic film production is severely restrained and this impacts upon the ability of domestic film producers to compete vigorously with Hollywood movies. See Louisa Lim, Film Director Battles for Soul of Chinese Cinema, NPR.org, Jan. 4, 2010, available at http://www.npr.org/templates/story/story.php?storyId=121570362&ft=1&f=1004. [FN55] In U.S. law journals. [FN56] A similar power struggle is occurring between the U.S. and China over allegations that China is not allowing the yuan to appreciate in value. Similar to the film debate, the power of external influence vs. internal incentive has arisen. It has been suggested that “foreign cajoling may not do the trick. But inflation might.” Chinese Foreign Policy: Not Pointing or Wagging, But Beckoning, Economist, Mar. 20, 2010, at 5. [FN57] China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, supra note 7, at ¶ 7.868. [FN58] Jing Zhang argues that because China has no freedom of speech, “a hasty drive for copyright enforcement may pose a threat to the already terribly meager freedom Chinese people enjoy.” Jing Zhang, Pushing Copyright Law in China: A Double Edged Sword, 18 DePaul-LCA J. Art & Ent. L. 27, 76 (1997).