China’s National People’s Congress Standing Committee on Monday adopted a film industry law which, among other measures, promises to be tough on box office fraud by doling out steep fines and suspensions. It also seeks to promote “core socialist values” and prohibits local groups from cooperating with overseas orgs or individuals who engage in activities damaging China’s national dignity, or those “hurting national feelings.” The law, which is the first of its kind in the Middle Kingdom, has been welcomed as a positive step locally, although some contradictions appear to exist within.

Among key stipulations laid out in the new legislation, as reported by the official Xinhua news agency, is a rule that theaters should ensure domestic films have at least two-thirds of annual screen time. Authorities must also help to develop a market of fair competition.

“Freedom of filmmaking” is to be ensured while no films should contain content that jeopardizes national unity, sovereignty and territorial integrity, damages national dignity, honor and interests, or advocates terrorism and extremism, Xinhua notes. Filmmakers “should serve the people and socialism, prioritizing social benefits and bringing about harmony of economic returns and contribution to society.”

Chinese groups likewise are empowered to collaborate with foreign entities excluding those that engage in “activities damaging China’s national dignity, honor and interests, or harming social stability or hurting national feelings.” Specifics were not outlined in the Xinhua report.

The codification of a crackdown on box office fraud is an important step. Although it’s believed that box office growth has slowed in China this year due in part to a curb on false reporting, a real effort to stop inflated figures may help level the playing field.

The PROC had already begun cracking down on box office manipulation. Earlier this year, watchdog SAPPRFT slapped the distributor of Hong Kong actioner Ip Man 3 with a one-month suspension from releasing films after investigating it for box office fraud. That was after the distributor of 2015 hit Monster Hunt had given away $6.2M worth of tickets for “public welfare” screenings” and acknowledged there were overnight and duplicate screenings. Edko said at the time that it was instituting “serious criticism” to those involved on the ground level, but there was no punishment by authorities.

Suspensions or revocation of business certificates are possible responses under the new law. Distributors and cinemas will see all illegal earnings confiscated and be fined more than 500K yuan ($74K) if ticket sales data is fabricated. If illegal earnings are found to exceed 500K yuan, fines may reach up to five times the amount questioned. Per the Xinhua report, statistics indicate that at least 1% of all box office takings have been “stolen” in recent years.

In other elements of the law, orgs will have to work with local firms rather than shoot independently in China. A move is afoot to bring more Hollywood productions to the Middle Kingdom, specifically at Wanda’s Qingdao Movie Metropolis complex. Chairman Wang Jianlin was in LA last month to incentivize Hollywood with a 40% rebate for “qualified productions,” but did not elaborate at the time on how that is defined.

With some high-profile celebrities involved in public scandals, a professional ethics committee is being established by SAPPRFT to help people in the Chinese industry navigate their way to “core socialist values.”

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