The World Trade Organization's ruling that Beijing violated trade law with restrictions on distribution of foreign films, books, and music could mean more revenue for US companies.
The US entertainment industry has long complained that sales restrictions and unchecked piracy are locking them out of China's vast marketplace. Movie studios are aggrieved that so few foreign films are screened. Booksellers dislike mandatory tie-ups with state-owned distributors.
In a judgment made public Wednesday the World Trade Organization (WTO) partly concurred. The WTO found that China's controls on the distribution of foreign books, films, and music violate trade rules. China said it may appeal the ruling, the latest in a series of disputes with the US, its largest trading partner.
Hollywood immediately hailed the ruling as a victory.
"The Chinese system for distributing US films to Chinese audiences is among the most restrictive and burdensome in the world.... This ruling represents a positive step in promoting the growth of legitimate US movies," said Dan Glickman, the chair of the Motion Picture Association of America, in a statement.
But Hollywood didn't get everything it wanted. While the WTO told China to open up distribution of home entertainment like DVDs, CDs, and books to foreign competition, which should put more money in US pockets, the WTO didn't disallow China's requirement that foreign studios work with one of two state-owned distributors, who can dictate terms for revenue sharing, or its quota on foreign films. Only 20 are allowed in a year, effectively protecting domestic studios and encouraging coproductions in China.