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When “Godzilla vs. Kong” opened with weekend sales of nearly $70 million in China in March, it seemed the market would be a bright spot for Hollywood studios: most theaters were open, while U.S. film-goers were still staying home because of the coronavirus.

But 2021 is turning into a disappointment for movie companies in China, which passed the U.S. last year to become the world’s largest film market. U.S. films have grabbed about 15% of the box office, on par with pandemic-impaired sales in 2020 and far less than the 32% they claimed in 2019, according to data compiled by Bloomberg from the Chinese ticketing service Maoyan Entertainment.

Rather than becoming a lifeline for Hollywood, China is turning into another headache, made worse by local politics, the pandemic and the country’s complicated relationship with the U.S. President Xi Jinping’s efforts to emphasize Chinese nationalism and tamp down anything perceived as too Western or immoral will complicate matters for U.S. studios, possibly for years.

“That is going to make it increasingly more difficult for Hollywood blockbusters to find interest in China and if they do gain entry to have the same box-office popularity that they have had in the past,” said Stephen Saltzman, an attorney with a number of film clients in China.

Seventeen U.S. films have been released in China this year, down from 30 last year and 52 in 2019, according to Maoyan data. Some of the top-grossing U.S. releases of the year, including Walt Disney Co.’s “Black Widow” and Warner Bros.’s “Space Jam,” have yet to receive premiere dates. It’s a big loss. In 2019, China accounted for $629 million in revenue for Disney’s “Avengers: Endgame.”

China’s potential for U.S. films was still looking strong as recently as late May, when Comcast Corp.’s Universal Pictures released the “Fast & Furious” installment “F9” to what would ultimately be a $204 million local haul.

Then China imposed one of its unofficial blackouts for Hollywood films. These periods, typically during the peak summer months or around national holidays, are meant to give a leg up to local studios. This year’s blackout was particularly significant, coming with the 100-year anniversary of the founding of the Chinese Communist Party, celebrated in July.

With the virus returning in August, the Chinese government entity that oversees the industry closed cinemas in high-risk markets and reduced capacity in others. That hurt both U.S. movies and local language releases, according to James Li, co-founder of Beijing-based consulting firm Fanink Research.

National Pride

Xi’s nationalism drive and China’s own version of “cancel culture” have brought more challenges for U.S. filmmakers. Late in August, officials also cracked down on Chinese celebrities who appeared insufficiently supportive of the party’s values. Actress Zhao Wei was scrubbed from the internet and social media.

Disney’s “Shang-Chi and the Legend of the Ten Rings” is the first Marvel superhero film to feature an Asian actor in the lead role. It’s been the top-grossing film in U.S. theaters since the pandemic, with $198 million in sales.

The picture got unwanted attention locally because in the original comic books the protagonist’s father was Fu Manchu, a character viewed as perpetuating racist stereotypes. Disney’s Marvel division changed the name in its films and the studio’s president, Kevin Feige, gave interviews to Chinese media trying to underscore that. It hasn’t gotten a release date there, however.

A further problem for Disney may lurk within the upcoming Marvel film “Eternals,” which was directed by Chinese filmmaker Chloe Zhao, who won the Oscar for best director in February for “Nomadland.” She’s made comments in the past that were critical of the country. “Nomadland” was initially given an April release date in China, but ultimately wasn’t allowed in the country. “Eternals,” which debuts Nov. 5 in the U.S., doesn’t have an opening date there either.

Not All Gloomy

Still, there are some prospects for U.S. pictures in China. Two films are scheduled for October: Warner Bros.’ “Dune” and Metro-Goldwyn-Mayer’s new James Bond movie “No Time to Die,” which is being distributed internationally by Universal.

“Dune” may have received favorable treatment because it’s a co-production with Legendary Entertainment, an arm of China’s Dalian Wanda Group, said Chris Fenton, an author and former movie executive. The Bond film, meanwhile, may be helped by its ties to Universal, whose corporate parent will broadcast the Beijing Winter Olympics in February, he said.

The months ahead will decide whether U.S. filmmakers can reclaim the market share they lost, but they face competition from important local titles. “The Battle at Lake Changjin,” an epic about the Korean War, is expected to be one of the year’s biggest films.

While next year could bring better results for U.S. films in China, the country will continue to present challenges for U.S. studios, according to Stanley Rosen, a professor of political science at the University of Southern California.

“They don’t need Hollywood as much as they used to,” Rosen said. “Given the Sino-American relationship now, they can afford to play hard to get and keep Hollywood thinking about what they need to do to ‘fix’ the relationship.”

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