The impact of economic policy on cultural behavior : evidence from U.S.-China trade war and film market

Abstract

International trade relations not only affect trade exchanges between countries, but also have a profound impact on other fields. Trade relations can directly affect cultural recognition and the consumption of cultural products. The trade frictions between China and the U.S. not only affect the trade exchanges between the two countries, but also affect Chinese people's attitude toward American culture. As a carrier of culture, the production and dissemination of film determines the exchange between different cultures. At a time of trade conflicts between China and the U.S., people's consumption of film reflects a change in attitude toward American culture and cultural products. The impact of the U.S.-China trade war has led to increased patriotism and aversion to the U.S. among Chinese audiences, thus reducing their preference for U.S. films and causing a significant decline in box office revenues for U.S. films compared to domestic films. This paper first introduces the trade friction between China and the U.S. and the history of the trade war. The frictions between China and the U.S. in international relations not only affect economic trade, but also affect all aspects of social life, including people's attitudes and cultural interactions. In this paper, we collected and obtained a rich data set of Chinese movie box office. Based on this data set, we constructed a differences-in-difference model to test the impact of international relations changes on the consumption of films. Specifically, we obtained monthly box office data for each movie in each region, and classified each movie into domestic, U.S. imported, and non-U.S. imported according to its origin. This paper examines the changes in domestic audiences' preferences for and consumption of U.S. imported films after the U.S.-China trade war. The empirical results show that domestic audiences are influenced by the patriotic sentiment and aversion to the U.S. inspired by the trade war, which reduces the preference and consumption of U.S. imported movies. Considering the characteristics of movie box office itself, we replace the explanatory variables with the share of box office of imported movies as well as box office ranking. We find that the U.S.-China trade war still significantly reduces domestic preferences for U.S. movies after replacing different indicators. This includes the share of U.S. movie box office in the overall movie box office, as well as the ranking on the box office chart, the ranking share, and the probability of ranking in the top five and top ten. In the robustness test section, we find that whether we control for the time trend of movie box office, exclude the change in ticket price, and consider the process of the U.S.-China trade war, the results still indicate that the U.S.-China trade war changed domestic audiences' preference for U.S. movies and made the box office of U.S. movies decline. Based on the baseline results, this paper further explores the regional-level heterogeneity of the impact of the U.S.-China trade war on the film market. The negative effect of trade war on the U.S. movie box office are smaller for regions located in coastal areas, with a high degree of economic openness and historically belonging to ports of commerce and foreign concessions, either because of closer economic, trade and cultural ties with foreign countries, or because they were influenced by foreign laws and institutions, and thus more inclusive of foreign cultures and cultural products. Regions along the Long March, on the other hand, have more heightened national sentiment, resulting in a greater decline in local U.S. movie box office in the U.S.-China trade war. In addition, this paper explores the channel through which the U.S.-China trade war affects the box office of the movie market lies in the high patriotic and anaerobic sentiments triggered by the trade war. This study extends the impact of the U.S.-China trade war to the cultural level and finds that the impact of the trade war is not only limited to economic areas such as consumption, investment and employment, which have been the focus of the existing literature, but also affects residents' cultural consumption preferences and impacts the cultural consumption market represented by movies. The baseline results of this study link the literature on international relations with cultural preferences and cultural consumption, enriching both branches of the literature while filling the research gaps. The conclusions of this paper are of practical guidance. The change of our residents' preference for cultural products as a result of the US-China trade war provides implications for domestic cultural product companies to grasp the opportunities of the times and cope with different international environments.