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No More Fun and Games: How China’s Acquisition of U.S. Media Entities Threatens America’s National Security

Darren E. Tromblay

Introduction

In recent months, U.S. – Chinese tensions have flared over China’s activities in the South China Sea and over the handling of North Korea.  However, these overt confrontations represent only one aspect of China’s efforts to undermine U.S. elements of national power.  China has a well-established respect for information warfare.  Chinese companies have made a variety of acquisitions in the United States that it can leverage to influence U.S. decision-making.  While certain aspects of this buying spree – telecom and media purchases – have made national headlines and prompted U.S. government inquiries, China’s entry into – and consolidation of its holdings in – the entertainment field provide a vector that has not been sufficiently scrutinized.

China’s Philosophy Regarding Information Warfare

China has long-recognized the value of information warfare.  The Peoples’ Liberation Army (PLA) has operated with the understanding that gaining control over adversaries’ information and information systems, at times preemptively, is essential to successful warfighting.[i]  In 2003, the Chinese Communist Party’s Central Committee and its Central Military Commission approved a warfare concept for the PLA which explicitly included actions to target public opinion – specifically degrading adversaries’ justification for action – via the media.[ii]  However, China does not limit its information warfare to military actors.  Rather it is using information operations not simply to prepare and control the battlespace but to create new international norms.  In July 2016, China’s president, Xi Jinqing, introduced the concept of a “China solution” in the search for better social institutions.[iii]  The concept, according to the Economist, remains ill-defined and but has cited by China as an applicable approach to any number of problems.[iv]  Developing support for this “China solution” to a given issue would allow Beijing to shape the policy of competing powers without resorting to coercion.  However, to do this, China must first reach the audiences that might be amenable to the accepting the “China solution”.

Going Hollywood

Since 2012, Chinese entities have made a significant push into the U.S. film production and distribution industry.  Chinese involvement in this area creates two primary concerns.  The first of these is that, by gaining control of distribution, China can effectively diminish the impact of films that it deems to be objectionable to Beijing’s interests.  China may take offense at any number of themes – ranging from portrayals of the country as an aggressor to glorification of protest and civil disobedience – that have filled U.S. movie screens.  A second, complementary, concern is that China will develop the resources to produce content with thematic elements supportive of a “China solution”.  Sympathetic, non-Chinese-produced, portrayals have already entered American theaters (one need look no further than the recent Disney nature flick, “Born in China”) – it is entirely plausible that Chinese producers will be able to capitalize on these sentiments with their own content.

The Chinese company Dalian Wanda has been a significant actor in acquisition of U.S. movie-making and distribution assets by China.  The company is an example of how a Chinese firm – or any other firm under a totalitarian government – can become a proxy for that government’s objectives.  Its founder and chairman, Wang Jianlin, served in the PLA – an entity which understands the significance of information operations – for nearly two decades and has claimed to remain close with the Chinese government.[v]

Dalian Wanda first acquired infrastructure for film distribution.  In 2012, it purchased the AMC theater chain.  It followed this, in 2016, with the purchase, through AMC, of Carmike Cinemas.[vi]  In combination these two chains represent the largest theater group in the United States.  Dalian Wanda has indicated that it intends to use its theater ownership to China’s advantage, by edging out other content.  Wang has stated that, “more Chinese films should be in [AMC’s] theaters where possible”.[vii]  Furthermore, theater ownership may also result in censorship of material that runs counter to China’s preferred narrative.  As Carolyn Bartholomew, a member of the U.S. China Economic and Security Review Commission noted, in 2013, “This investment in the entertainment industry, particularly if you look at movies and other sort of cultural production, it’s perhaps not quite as benign as we think that it might be. I’m waiting to see if there any forthcoming movies about Tibet and whether the AMC theatres will be allowed to show them.”[viii]

In an apparent effort to promote the production of the Chinese films that Wang desires, Dalian Wanda as well as other Chinese companies have started acquiring ownership stakes in U.S. movie studios.  In 2016, Dalian Wanda purchased Legendary Entertainment – a major Hollywood studio responsible for multiple blockbusters prior to being acquired by the Chinese.[ix]  (Dalian Wanda also made a failed bid to acquire Dick Clark Productions.[x])  However, Dalian Wanda is not the only Chinese firm accumulating influence in the film industry.  Paramount Pictures – after a failed deal to sell a 49 percent share to Dalian Wanda – struck a deal with the Chinese film companies Shanghai Film Group and Huahua Media.[xi]

Ownership of distribution and production capabilities gives China increased control of what the American public sees.  It has already used a heavy-handed approach to this effect in China.  In early 2010, the Chinese state-owned China Film Group Corporation released Confucius, starring Chow Yun-Fat as you-know-who.  Officials ordered that the competing U.S. film, Avatar, be pulled from various theaters, to free up screens for what turned out to be – based on audience reaction – a not-terribly-satisfying movie.[xii]  While it cannot use government coercion to evict films in the United States, Chinese control over theaters effectively creates a fiefdom on American soil.

In addition to pro-China content, China has already demonstrated that it is willing to use its media resources to develop anti-American material.  For instance, Chinese Communist Party-controlled companies made films glorifying the September 11 attacks.[xiii]  More recently, China released a film titled “Dangerous Love” which was not about VD but, rather, was a warning to young Chinese women about the dangers of falling for foreign students and professors.[xiv]  Interestingly, part of Wang’s motivation for purchasing Hollywood companies is to export the companies’ technology and capability to China.[xv]  Acquisitions could, therefore, lead not simply to heightened Chinese influence but also to the degradation of U.S. interests through the production and dissemination of hostile propaganda.

“You Want to Play Games? . . .”

Another nexus to entertainment that China may exploit in furtherance of activities, including information warfare, is the field of U.S. video game companies. Chinese companies acquired Riot Games, Epic Games, and Cryptic Studios. All three of these companies have U.S.-based R&D operations.[xvi]The underlying technologies associated with gaming have long been identified by the military as potential assets.  This is illustrated by the 1999 formation, by the U.S. Army, in conjunction with the University of Southern California, the Institute for Creative Technologies to develop realistic training simulations that used new technologies such as virtual reality and artificial intelligence.[xvii] Even if China is not acquiring U.S. gaming companies for knowledge of artificial intelligence, virtual reality, graphics, etc. these entities could still prove to be of value from a soft-power perspective. Just as films can be used to propagate desired messages, the treatment of China in virtual combat settings (e.g. casting it as an enemy, an ally etc.) or incorporating Chinese mythology into a game’s narrative could make effective use of high-end technology for purposes of perception management.

“ . . .  Say hello to my little Friend [i.e. CFIUS]”

China’s incursion into the U.S. entertainment industry highlights the reality that regulation of foreign investment requires reevaluation.  The Committee on Foreign Investment in the United States (CFIUS) is supposed to function as a gatekeeper, preventing foreign acquisitions that could harm the United States’ elements of national power.  However, CFIUS has historically focused on acquisitions with direct implications for “hard power”.  This does little to account for information warfare – directed at changing public perceptions and resultant policy decisions – which circumvents military coercion entirely and yet degrades U.S. elements of national power.

Conclusion

China’s inroads to the U.S. entertainment industry merit closer examination given their implications for information warfare.  American popular culture, including the output from Hollywood, has been a soft-power asset for decades.  By gaining greater control over the entertainment industry, China threatens to nullify this advantage and even turn it against U.S. interests.  If China is able to shape norms – by creating support for a “China solution” to various issues – through media such as films and video games, it can achieve its geopolitical objectives, vis-à-vis Washington, with a minimum of saber-rattling.

End Notes

[i] http://nsarchive.gwu.edu/NSAEBB/NSAEBB424/docs/Cyber-066.pdf

[ii] Larry M. Wortzel. The Chinese People’s Liberation Army and Information Warfare. United States Army War College Press. 2014

[iii] Tortoise v hare; China and America. The Economist. 423.9034 (Apr. 1, 2017): p35(US).

[iv] Tortoise v hare; China and America. The Economist. 423.9034 (Apr. 1, 2017): p35(US).

[v] Richard Berman, “China’s Rising Threat to Hollywood” Politico. October 4, 2016.http://www.politico.com/agenda/story/2016/10/china-hollywood-movies-threat-000216); http://nsarchive.gwu.edu/NSAEBB/NSAEBB424/docs/Cyber-066.pdf

[vi] http://www.latimes.com/business/hollywood/la-fi-ct-amc-carmike-20161114-…

[vii] Richard Berman, “China’s Rising Threat to Hollywood” Politico. October 4, 2016.http://www.politico.com/agenda/story/2016/10/china-hollywood-movies-thre…

[viii] Trends and Implications of Chinese Investment in the United States. Hearing before the U.S. China Economic and Security Review Commission, 113th Cong. (2013).

[ix] http://www.reuters.com/article/us-dalianwanda-chairman-idUSKCN10Y13K

[x] http://variety.com/2017/tv/news/dick-clark-productions-dalian-wanda-acqu…

[xi] http://chinaownsus.com/app/uploads/2016/10/Culberson-Letter-to-Assistant-Attorney-General-Carlin.pdf; Reuters. Paramount Pictures Strike a $1 Billion Deal with Two Chinese Film Companies. January 19, 2017. http://fortune.com/2017/01/19/paramount-pictures-china-film-investment/

[xii] John Dotson. The Confucian Revival in the Propaganda Narratives of the Chinese Government. U.S. China Economic and Security Review Commission. July 20, 2011.

[xiii] Joshua Kurlantzick. China: Economic Power, Political Enigma. Washington Quarterly, 2002 25:3 pp 59-67

[xiv] James Fallows, China’s Great Leap Backward, The Atlantic,http://www.theatlantic.com/magazine/archive/2016/12/chinas-great-leap-ba…(December 2016)

[xv] Matthew Miller and Shu Zhang. “China’s Richest Man Set to Seal Two Billion-Dollar U.S. Film Deals” Reuters. August 23, 2016

[xvi] “New Neighbors,” 60.

[xvii] Karen Kaplan. Army, “USC Join Forces for Virtual Research Technology: Effort Could Provide More Realistic Military Training Simulations – and Better Hollywood Special Effects,” Los Angeles Times, August 18, 1999.

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