A Public-Private Partnership Can Reform Our China Relationship
With each day comes the worst day in the U.S.-China relationship. Even worse, shifting the dramatic decline seems impossible. Though many have rightfully grown hawkish, as a father hoping my kids inherit a world free of war between global superpowers, we MUST passionately balance hawkishness with practicality and constructiveness. Now is certainly not the time for gaslighting, nor should it ever be when dealing with another nuclear nation. Especially one so complicatedly entangled with us.
So, who could be the heroes to save us all from this potential, real-life Shakespearean tragedy? Some may squirm with the answer, but one of the knights-in-shining-armor is the business community. Though they can’t do it alone. Another hero is needed, and that crucial ally is the United States government.
Congressman Mike Gallagher (WI) chairs the perfect Washington cavalry for this public-private partnership too, calling it the Select Committee on Strategic Competition between the United States and the Chinese Communist Party. He and his best-in-class bipartisan team have set out to achieve viable solutions for a constructive bilateral rebalance, knowing well the immense, yet grave challenge this mission holds. However, with the help of the private sector community, key Committee goals can be achieved. And I’m humbled they asked me to help with the private sector driver of cultural and commercial exchange -- Hollywood.
I’ve spent twenty-plus years entrenched in the Hollywood-China dynamic, and over much of that period many of us helped to educate Washington on this complicated bilateral engagement. I had the honor of co-hosting many Members of Congress in China, witnessing, first-hand, many benefits of those people-to-people exchanges. Several of those delegations returned from the Middle Kingdom enthusiastically providing massive wind-to-the-back for the capitalistic trade of culture, such as momentum in 2012 for then-Vice President Biden to renegotiate an enhanced film treaty and CFIUS to loosen incoming investment scrutiny.
However, I did also observe the Beltway’s skepticism of this bilateral exchange that same year. In fact, many of us in Hollywood navigated a multi-year SEC investigation of the major studios for alleged FCPA violations. That following year, CFIUS started to rethink its approach to China too, eventually increasing restrictions on incoming investment throughout the Trump Administration… and rightfully so.
The battle between bilateral encouragement versus throttling has been ongoing in Washington for a few decades. All industries and c-suites have encountered these opposing forces too. Increasing bilateral engagement dominated the psyche of most politicians and regulators for much of that time. But more recently, choking unrestrained bilateral flow has taken hegemony… and with full bipartisan support.
An advantageous path forward can only be constructed with the full cooperation of government and industry working together. This partnership must construct a rebalanced and consistent rules-of-engagement for the future well-being of this vital bilateral relationship. Afterall, the current bilateral condition for all industries is simply unacceptable. Specific to Hollywood, we must no longer tolerate and comply with Beijing forcing upon us items like global censorship, international pro-China narratives and propaganda, inadequate revenue-share agreements, joint ventures such as China’s 57% and 70% ownership of Disney’s and Universal’s respective PRC-located theme parks, illegal copyright and IP exploitation, tech theft, restrictive film quotas, process swaps, and skillset exchanges. Enough is enough!
But full decoupling isn’t the answer. As much like a cell phone, there are five bars of service that keep countries working together versus going to war. I refer to them as “Fenton’s Five Forces” (Thank you, Michael Porter!). Two countries need at least one force, or bar, working to keep their connection. Three of those five forces are politics, national security, and human rights. Three forces we obviously don’t agree with China on. The other two forces are culture and commerce. And those avenues, for now, are still open for business between the two superpowers.
Hollywood sits at the center of that intersection, with culture being our forte. And unlike commerce, which alone is purely transactional, culture adds emotional and human connection, fostering a much stronger bond between countries. The cultural and commercial duo works far greater than the fragile national security and commercial exchange-based relationship we have with Saudi Arabia. And it’s certainly better than the zero bars of service we currently share with Russia or North Korea.
Therefore, Hollywood must be part of the solution. By collaborating, our community can help keep those two vital bars of connection while co-designing policy and regulations we can live with as an industry. But without collaboration, I fear Hollywood will attempt to continue the bilateral status quo as China continues to impose its massive market leverage, forcing widespread industry compliance.
Gone are the days of the “One Company, Two Systems” (Jacob Helberg’s term.) type of misguided capitalistic strategy, where industries can apply a certain set of rules and compromise inside China, while espousing and executing the opposite elsewhere. Seeing a status quo approach by Hollywood as counter to American interests, Washington will have no choice but to force our industry to end almost all bilateral cultural exchange with China. As a result, the two countries would be left with only one fragile bar of service -- commerce.
The Committee instead believes companies and industries-at-large can avoid such “one foot in two, separating boats” bilateral predicaments. Devising practical and constructive policies and rules to level the bilateral playing field and protect the national security interests, values, and principles Americans hold dearly can be accomplished. That said, these efforts will fall short if the business community doesn’t help.
Our rivals across the Pacific studied The Art of War. They are hoping for just that. For if we are divided, we will indeed fall.
Therefore, I ask my peers in Hollywood to partner on the Committee’s well-intentioned mission. Success depends on all of America’s public and private sector leaders playing our A-game together, as a team, to effectively compete with China.
I hold great hope we will get it done. For if we are united, we will certainly stand!
Chris Fenton is a longtime media executive, producer, and author of FEEDING THE DRAGON: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA, & American Business. As a member of the U.S.-Asia Institute, Council on Foreign Relations, the National Committee on U.S. China Relations, and Third Way Think Tank, he passionately helps the private sector and Washington navigate America’s complicated relationship with China. @TheDragonFeeder
