A Chinese Star Goes Missing, and All of Hollywood Is Spooked

With Fan Bingbing accused of tax fraud, 'Crazy Rich Asians' failing to land a Chinese release and film stocks plummeting, president Xi Jinping's crackdown on "money worship" is reshaping the country's cultural landscape: "The government is going to make examples out of a lot of high-profile people."

On Sept. 16, filmmaker Jia Zhangke unveiled his epic drama Ash Is Purest White in Beijing, days ahead of its wide release in China. Noticeably missing from the movie was a scene featuring director and sometime actor Feng Xiaogang. Just four months earlier, Feng and frequent collaborator Fan Bingbing had been front and center when the film made its world premiere in Cannes, with Feng gracing the poster and Fan, who is not in the drama, walking the red carpet as something of an ambassador given her status as China's biggest female star.

Now, Fan and Feng are missing in action, believed to be the targets of a Chinese government crackdown on celebrity tax evaders. That has sent shock waves throughout China and all the way to Hollywood, where such projects as Universal's ensemble female spy pic 355 — featuring Jessica Chastain as star and producer — hang in limbo.

And Fan and Feng's legal predicaments aren't the only red flags spooking Hollywood. A wave of aggressive action by Beijing regulators the past year suggests that Chinese President Xi Jinping is tightening his grip on the country's cultural sector. Warner Bros., among those affected, has all but conceded that Crazy Rich Asians will not receive a China release, making it doubtful the potential sequel, based on author Kevin Kwan's follow-up novel, China Rich Girlfriend, will shoot in the nation. The crackdown has left U.S. studios and agencies more uncertain than ever of their footing in the massive China market.

"The government is going to make examples out of a lot of high-profile people who've made a lot of money and spent a lot of time in the West, because that's not what a good Chinese citizen does," says a U.S. producer who works frequently in China.

Fan, whose CAA agents have not heard from her since she disappeared from public view in June, is one of those people. The 37-year-old actress' troubles began with her involvement in a widely publicized tax evasion scandal in May when her so-called "yin-yang" contract for Cell Phone 2, the upcoming sequel to a hit Feng film from 2003, was posted on social media (the leaked contract indicated that Fan tried to claim $1.6 million for four days of work on the film when her actual pay totaled an additional $7.8 million).

Two sources familiar with the situation say Fan hasn't been imprisoned but that's the expectation, with authorities using her vertiginous fall from grace to send a strong signal to stars and studios to put greater emphasis on toeing the party line rather than pursuing personal enrichment. On May 24, the government also announced an investigation into widespread tax fraud in the film business, which sent share prices of many publicly traded Chinese film studios tumbling (most have yet to fully recover). Huayi Brothers Media, with its numerous Hollywood tentacles that include a $250 million majority investment in the Russo brothers' Agbo, has been hit the hardest — its stock is off 38 percent since the announcement. Similarly, Beijing Enlight Media is down 36 percent, while Alibaba Pictures Group has declined 19 percent.

The situation with Fan puts CAA in an awkward position. The agency has funneled millions into its China Motion Picture Group, which is run by Wei Hao and Daniel Manwaring (Fan and Feng's agent), and has built its roster to include Jackie Chan, Donnie Ye and Zhang Yimou. When CAA promoted Hao, the Sept. 12 news release made no mention of Fan as a client. CAA declined comment for this story.

As a result of Fan's tax woes, the Simon Kinberg-helmed 355's financing will likely have to be restructured. In Cannes, Huayi spent $20 million for Chinese distribution rights even though there was little interest from other distributors at the time (CAA negotiated the U.S. and China distribution component of the deal). "Fan would play a spy from China cooperating with Western spies. That would probably never get a release in China," says a source who considered the property at the time. Production isn't expected to begin until 2019, and Universal, which paid $20 million for domestic rights, will have the right to walk away if it doesn't approve of Fan's replacement.

Meanwhile, Crazy Rich Asians may have captured the cultural zeitgeist in the U.S., but its timing couldn't have been worse in China, with Communist Party officials berating the country's stars for encouraging "money worship" among the youth. China Rich Girlfriend, which is primarily set among Shanghai's one-percenters, will almost certainly run into trouble if it tries to shoot in China.

"There are sensitivities, to be certain. The key to navigating China is paying careful attention to those sensitivities," says Millennium Films president Jeffrey Greenstein, who has secured a China release for an average of two films a year — including London Has Fallen and all three Expendables movies — for the past five years. "Potential land mines are anything sensitive to the Chinese culture, anything politically oriented. Even things pertaining to Chinese allies like Russia and North Korea."

Those sensitivities were on display when China nixed Disney’s Christopher Robin from getting a release in the country. A source pinned the blame on the country’s crusade against images of the Winnie the Pooh character -- a central character in the film -- who has become a symbol of the resistance with foes of the ruling Communist Party. The only other Disney film this year to receive a no from China was A Wrinkle in Time. Even HBO, which doesn’t have a service inside China (its content is licensed locally by Tencent), felt the displeasure of the Chinese this summer in the wake of John Oliver mocking Xi on his Last Week Tonight, poking fun at the president’s resemblance to Winnie the Pooh. Oliver was promptly scrubbed from the internet in China, and the HBO website was taken offline there and remains so to this day.

Elsewhere, China's investment spree in Hollywood appears to be dead. Dalian Wanda Group kickstarted the former frenzy with its $2.6 billion acquisition of AMC Entertainment in 2012. Billions of dollars worth of yuan soon flowed East, with Chinese firms large and small pouring capital into slate-financing deals and high-priced Hollywood acquisitions. But Sept. 14, Wanda, already shrunken and battered by regulatory action during the preceding year, signaled a full retreat, selling off a third of its stake in AMC — widely considered one of the most valuable U.S. movie assets China had acquired — for $421 million.

Making matters worse for Hollywood is President Trump's tough stance on trade with China. Absent a trade war, China likely would have revised the quota upwards and allowed more Hollywood films into the marketplace this year, simply because the country is feeling newly confident in the domestic industry's ability to compete for market share. During the first eight months of this year, China's box-office revenue for imported foreign films -- the vast majority of which are Hollywood blockbusters -- fell 18.1 percent, year over year. If the downward trend continues for the final third of the year, 2018 will mark the first time in more than a decade that Hollywood hasn't notched a full year of robust growth in the world's most populous nation. This is particularly notable given that the studios are having a strong year at the North American box office. Instead, the old quota has remained in place, and it's entirely possible that Beijing will crack down on the highly visible import of Hollywood films if the trade war continues to escalate.

But Cristal Pictures president Scott Einbinder, whose L.A.-based production and finance company is backed by China’s East Light Film Co., says there is still plenty of opportunity in the Middle Kingdom. He pointed to the success of summer shark hit The Meg, which was co-financed by China’s Gravity Pictures and earned $153 million of its $507 million worldwide haul in that country, as an example of striking the right balance.

“There’s still a lot of potential upside in doing business in China. But everybody doing business there has to be cautious and has to have an eye on what’s going on geopolitically around the world in order to understand how to make movies in China,” says Einbinder, whose debut film, The Hitman’s Bodyguard, was a hit here and in China. “Anyone who doesn’t is being naïve.”

Ultimately, being on top in China might not be desirable. Wanda chairman Wang Jianlin was China's richest man, and Fan was China's highest-paid actress. Both have been cut down to size by Beijing in the past year, sending a stark reminder of who's really No. 1 in the world's most populous nation: the Communist Party of China.

This story first appeared in the Sept. 20 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.