Rolling out the Red Carpet - By Damien Ma

In the 1997 international political thriller Red Corner, Chinese officials in Beijing entrap an American lawyer for murder. Richard Gere, a noted disciple of the Dalai Lama, China's public enemy No. 1, plays the lawyer fighting for justice in the benighted Chinese legal system, aided by a Chinese female lawyer willing to risk her life for American-style justice and freedoms. But by 2013, another American lawyer was finding love and humor in Shanghai -- the premise of the just-released romantic comedy Shanghai Calling, which the New York Times calls "a plug" for China. These days, "Why would you make a movie that demonizes China?" asks Daniel Hsia, who wrote and directed the film.

Why indeed? Over the past two decades, Hollywood's perception of China has evolved, from a totalitarian state to a major growth opportunity. And as the American movie industry increasingly needs China, its films have begun to alter content accordingly. Life of Pi, which has no connection to China besides the Taiwanese ethnicity of its director Ang Lee, has received 11 nominations for Sunday's Oscars, and box-office receipts of more than $90 million on the mainland. The uncontroversial film is the only one of the Oscar nominees for Best Picture to have been shown in movie theaters in China. In all likelihood, that's for good reason: In the American version, a character declares that "religion is darkness"; in the Chinese it was changed.

An offspring of a co-production with China Film Group, the largest state film conglomerate, Shanghai Calling underscores Hollywood's shifting strategy toward China and the overt or self-censorship it brings. A decade after China entered the World Trade Organization, Hollywood is only allowed to export about 20 films a year to the China market, where box office sales climbed to more than $2 billion in 2012.

One way around the quota restriction, explains Hsia, is to get approval for co-productions. Under this arrangement, a Hollywood studio partners with a Chinese entity in order to have the final product considered a domestic film, exempting it from the import quota. It also allows for risk-sharing, because the Chinese partner puts up part of the money. The potential for Chinese money and market access is highly attractive to a Hollywood that faces dwindling domestic ticket sales and saw declining profits in five out of six of its major studios in 2012.

Although China has made it much easier for Americans to invest, getting a co-production approved is still a difficult process. Ideologues in the Communist Party have long considered Western culture "spiritual pollution" and viewed Hollywood suspiciously as an instrument of American statecraft packaged into nebulous "soft power." Scripts for co-productions are submitted for approval to the State Administration for Radio, Film, and Television (SARFT), which oversees the film and entertainment industry. "Like in any business negotiation, the person who has the power to say no has the leverage," says Hsia.

Here's where censorship comes in: SARFT even meddled with the making of a rather innocuous and apolitical comedy like Shanghai Calling. But beyond what foreign filmmakers must do to get a co-production approved, the effort to avoid offending the Chinese has had an impact on film content in the U.S. market. Subtle but noticeable changes have also seeped into on-screen portrayals of China.