In the context of the Chinese government's persistent pursuit of a Zero-COVID policy during the pandemic, the year 2021 marked a turning point for domestic film companies and the Chinese Communist Party (CCP). Notably, Chinese theaters achieved a historic milestone, surpassing global competition by collectively grossing the highest box office share for worldwide box office revenue. With approximately 1.7 billion movie tickets sold and $7.3 billion USD in earnings, this achievement raises questions about China's evolving position in the global film industry.

The absence of international films in the top 20 highest-grossing films of 2021 underscores China's potential for self-reliance, as Hollywood productions took a backseat. Only 12% of that year's total box office sales came from US-imported movies, while eight of the top ten highest-grossing films were domestic productions. In 2023, China's domestic film market continued to thrive, with 83.77% of the total box office revenue (over $7.75 billion) generated by local productions. Notably, all top 10 films were domestic, led by the historical thrillers and sci-fi genres. Although 88 foreign films were imported in 2023 (the most since 2019), Hollywood's share of China's box office remains limited. For example, Disney and Marvel films returned after a hiatus but did not make significant box office gains, This shift prompts inquiries into the motivations and strategies behind China's move toward self-sufficiency in its film industry and what this means for film distribution as a soft power tool.

This paper seeks to analyze “decoupling” through interdisciplinary methods such as qualitative analysis by examining causal relationships and testing hypotheses using evidence from journalism, established political science research, and government documents. The report comprises multiple case studies and delves into how the US and Chinese film markets respond to changing bilateral relations and how Hollywood producers navigate an increasingly polarized environment.