China Caps Film Stars' Pay: Is the move Justified?

  03-Jul-2018 13:34:50

China Film stars

Is it justified that Chinese Government has put a limit to the film Star’s pay? The answer to this question might not be as straightforward as it seems on the face of it. Let's look at this issue in detail and then come up with a conclusion.

Stern actions were taken in order to curb tax evasion and put a hold on the unreasonable rate of pay to the celebrities. Chinese Authorities capped the payment of celebrities using firm rules and regulations and at the same time blamed the film industry for encouraging money worship and garbling moral and social values. Two major laws were enforced a couple of weeks after China declared on June 3 that it would launch a tax evasion probe into the Chinese film industry, following a controversy involving superstar Fan Bingbing, one of the country’s highest-paid actors and the fifth highest paid actress in the world.

The major regulations released by joint notice from 5 government agencies, including China’s tax authority, the television and film regulations and the Chinese Propaganda department are as follows:

➢ The Salaries of the on-screen performers should be capped at 40% of the total production costs.

➢ Leading actors should not receive more than 70% of the total wage of the cast.

The rules are applicable to movies as well as TV shows and other online content.

In the month of May 2018, a well-known Chinese TV reporter Cui Yongyuan forwarded some photos of contracts believed to belong to Fan Bingbing. The contracts, one of $1.56 mn and the other of $7.8 mn were publicised as an act of “Yin-Yang Contracts”, a common practice of tax evasion in which only the smaller contract is reported to the authorities. Fan denied any such wrong actions while Cui accused many other celebrities of conducting the same behaviour.

Xinhua News Agency, the official news agency in China reported that illegal payment practices, that includes drawing up of fake contracts to falsify income declarations, eventually leads to increasing production costs and undermining the overall product quality. This on whole damage the Chinese film industry which is worth $8.9 billion today. Moreover, the issue of tax evasion and practice of yin-yang contracts have led to money worshipping and led Chinese youth to a misleading path. The notice said that Chinese Youth is being made to blindly chase the stars. It further notifies that production should prioritise the benefits to society rather than focusing only on the profits. “Box-office returns and click-through rates should be firmly opposed”, the notice implied. Tax authorities in Jiangsu Province, a place where Fan Bingbing runs a film studio, reported that certain alleged film and television professionals are being investigated by a team based on online discussion forums. Chinese regulators have been working tirelessly to rein into the film industry and online content.

It was believed that Chinese citizens would come out in strong support of the laws. This seemed to be the case as many people took to social media to express their anger in response to the exorbitant salaries of country’s stars.

“Society has given them so much and look at what they have given back”, wrote a Weibo user in response to the news of salary caps. Many were supportive but cynic of any real change. “Thunder sounds loud but the raindrops are small. Other departments have made such announcements before but no stringent actions were taken”. A directive issued to the Chinese News Agencies earlier in the month of June implied that “Content related to tax issues involving people from television and film industry and “yin-yang” contracts must be held back”.

In other film industries such as Hollywood or Bollywood, the Government doesn’t involve in the payment matters of Film stars or television actors. But in China, this is not so. The Chinese government tends to have more oversight over many industries even if they are in the private sector. Chinese Authorities are no stranger to applying censorship and regulations to the film industry. Social media channels have sensitive words filtered out and Journalists are being asked to follow rigorous political regulations.

Will Censorship kill Chinese Film Making? That’s maybe the question arising in the minds of most of you. Well, it depends. The main purpose of the authorities was to end tax evasion the industry was mainly focused on the Box-Office Returns by practising illegal methods such as tax evasion through yin-yang contracts. A slight change in the nature of cinema in China is expected, as a defensive action by the industry against the government, in order to prove their loyalty but this is surely not the end of Chinese cinema. The steps taken by the Chinese government towards capping their pay is justified, keeping the reasons in mind and provided that all the allegations are true as stated by the government authorities.

While Chinese film industry does not have the same international reach as Hollywood films but there have been several Chinese-Hollywood Projects in recent years. Chinese Film industry matters a lot due to the ample number of Chinese theatres. Experts believe that China is going to be the world’s largest film market in the coming years. Hollywood industry has already started to adapt their content in order to have a strong appeal to Chinese Audiences.

Conclusion: The Directive was a small yet rigorous implementation required to fairly regulate Chinese film industry. It was a justifiable attempt to usher in some sought of equality in the cinema sector.

Written By – Pulkit Agarwal