China Enacts New Film Promotion Law

China’s long-awaited Film Promotion Law was enacted by the Standing Committee of the PRC National People’s Congress on November 7, 2016 and is set to take effect on March 1, 2017. We last wrote about the Film Promotion Law when China’s National People’s Congress issued a draft for public comment in November 2015. The newly enacted Law does not differ markedly from the earlier draft. Below is a list of the main differences by reference to Article numbering:

1. Purpose — In addition to promoting the film industry, the purpose of the Law has been broadened to include promoting socialist core values and regulating film market “order”.

2. Streaming — Existing laws applicable to streaming of motion pictures on the Internet, telecommunication networks and radio networks will continue to apply.

5. National development plans — The State Council is to incorporate the development of the film industry into national economic and social development plans.

9. “Social ethics” for cast & crew — Actors, directors and other professionals in the film industry must not only possess high artistic skill but also abide by socialist core values, social moral standards and professional ethics codes, comply with the law and build an excellent social image.

14. Confirmation of national treatment for official co-pros — This is a reiteration of the existing policy that co-productions meeting the ratio requirements with respect to creation, funding, profit distribution will be treated as motion pictures produced by domestic PRC legal entities.

15. Motion picture production license requirement deleted — Originally, a “film production license” requirement was imposed. Enterprises or organizations that had the appropriate personnel, funds and other resources were expressly entitled to engage in film production activities provided they received approval from the relevant film authorities at the provincial level.

18. Panel of “experts” — Reviews for production and exhibition approval will involve at least five experts. The draft Law did not specify the number of experts. A definition of “expert” is not provided. Experts will be selected from an “expert pool,” having regard to a picture’s theme. Specific measures on expert selection are to be promulgated by the relevant department of the State Council.

19. Second review process — If a picture’s content needs to be changed after a public release license has been obtained the film must go through a second review process. The draft Law provided that a public release license was to have been obtained after the second review process but the new Law deleted this requirement.

22. “Hurtful” or “harmful” business activities banned — Citizens, legal persons, and other organizations may undertake business activities that include the printing, processing, post-production of foreign films and must file with the relevant film administration department at the provincial level. What must be “filed” is not specified. Any business activities in connection with foreign films that contain content that could hurt PRC national dignity, honor and interests, social stability or ethnic unity will not be allowed.

29. “Reasonable arrangement” of screening times — In addition to making sure the total length of films produced by domestic legal persons/organizations is no less than 2/3 of the total length of all of the films released in a given year, movie theaters must also “reasonably arrange” the times and screenings when such films are being released.

31. In-theater anti-piracy — When theater personnel find someone is illegally recording a film, not only can they stop such behavior (as in the draft Law) they can also demand that such content be deleted and can ask those to leave immediately if they refuse to obey.

37. Stronger audit powers — The government is to “strengthen” audits of the use of funds in the film industry.

All up, the law is apparently intended to simplify the regulation of screenplays, film productions and exhibitions and the holding of foreign-related film festivals. There are no fundamental changes to the existing regulatory framework as it affects foreigners. Foreigners will still be prevented from engaging independently in film production in China. Foreigners will still be prevented from engaging in film distribution in China. No mention is made of any lifting of the quota on importing foreign films on a revenue-sharing basis. Still, many of the changes should streamline the official co-production process for foreign producers. There is also now express official recognition of the need for improvements in the system of film finance and the need for tax incentives for local producers.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.