CNBC's The China Connection newsletter: 'Spider-Man' and 'The Odyssey' come courting the massive filmgoer market

Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a snapshot of what I'm seeing and hearing from local businesses. China doesn't have any 70mm Imax screens for "The Odyssey," but that hasn't stopped fans from snapping up tickets for premium screenings. Several showings were nearly sold out this weekend, and at the Beijing theater I visited Sunday, there was a rare line to get in. But is Hollywood doing enough? The big story America's movie stars are back in China. From Timothee Chalamet selling tofu in Chengdu to Tom Holland and Zendaya enjoying sheep-themed matcha in Shanghai, Hollywood is actively courting a massive market that's tightly controlled by Beijing. Some of it's paying off. "Spider-Man: Brand New Day" has already broken into the 10 highest-grossing movies in China this year, according to ticketing site Maoyan. As for "The Odyssey," it has already made more than $7 million in China, in just two weekends of limited screenings ahead of its official Aug. 14 release. Adding attention was an unconventional interview that went viral. Among a few local media appearances, director Christopher Nolan spoke with Yiyang Zhuge, a Boston College doctoral candidate who also hosts her own podcast. Their philosophical conversation has racked up more than 1 million views on streaming site Bilibili, and millions more on X. Zhuge claims someone from Universal reached out several weeks earlier to set up the post-premiere interview in Beijing. It contrasts with the studio's reported focus on traditional media in the U.S. A representative for Universal did not respond to a request for comment. The increased engagement comes as U.S.-China tensions have thawed this year. In the first six months, Imax screened 14 Hollywood films in mainland China, up from just two during the same period last year, filing data indicated. Not all the movies have done well. "Marty Supreme" and "Devil Wears Prada 2" both sent their leads to China but their box office struggled. "Toy Story 5" had only modest success. "The box office has picked up dramatically in China in recent weeks," Imax CEO Richard Gelfond said on an earnings call in late July, according to a FactSet transcript. He anticipates further improvement with upcoming films "Dune: Part Three" and "Avengers: Doomsday." The company also expects to benefit from popular Chinese series due to see new films released early next year, such as sci-fi title "The Wandering Earth." But it's hard to shake off bigger changes in how consumers spend. Industry figures show China's box office plunged 40% in the first half of the year. The content flow is also no longer one-way. Two of China's three highest-grossing films domestically this year have rolled out to other parts of Asia and abroad, helped by Alibaba's Damai Entertainment. Their overseas box office results are modest so far. But in a reminder of the Chinese studios' potential, it was just last year that Chinese animated movie "Ne Zha 2" beat Pixar's "Inside Out 2" as the top-grossing animated film worldwide, albeit largely at home. New formats and models Some companies in China are going further to upend entertainment. There's the Chinese-led micro-drama trend that's overtaken Netflix in the U.S. on mobile, according to Omdia. Then there's the rise of immersive virtual reality. As artificial intelligence enables studios to create VR content more cheaply and quickly, consumers can experience new productions more frequently, creating "the next generation of cinema," Ethan Tang, CEO of Metavision International, told me in Chengdu last month. Working with studios in France, Spain and Canada, the VR experience operator uses Pico or HTC headsets at designated venues in China and other countries to immerse people in 40-minute stories, set in ancient Egypt or the time of the dinosaurs. There's still a ways to go before replacing movie theaters. Tang said that across four venues, the company made $14.82 million in ticket sales in three years. But he said Metavision is already profitable. It reflects how VR may not be for the mass home market — and how cinematic experience may evolve. "Immersive entertainment commercializes fastest when one operator controls the hardware, the environment, and the narrative all together as a single integrated experience," said Jialu Shan, an associate research director at the Center for Future Readiness at IMD Business School. "One thing genuinely unique to China is the sheer scale of the large-format, location-based VR venues," she said, noting state policy support for such experiences. In combination with tourism, it's a trend she expects is more investable. But Hollywood hasn't made the leap yet. When I asked Tang about American content partners, he said it was "just a matter of time" before Hollywood studios license their characters to VR producers. He claimed Apple Vision Pro product engineers already tried Metavision's VR experience in Shanghai last year. Apple did not respond to a request for comment. Even as U.S. giants eye China's entertainment market, it may be changing faster than they can adapt. Need to know China's crude oil imports hit a three-month high in July A thaw in Strait of Hormuz tensions lifted China's crude imports last month, narrowing the year-on-year decline to just 24%, versus a 41% drop in June. AI-related demand drove China's overall export growth of nearly 24% year-on-year in July. U.S.-China tensions ramp up ahead of Trump-Xi meeting China retaliated against recent U.S. actions — such as restrictions on foreign-made humanoid robots — with export controls on drone sales to the U.S. Beijing also banned Chinese companies from working with U.S. entities for completing factory inspections required for selling electronics and other goods in China. Wealthy Chinese scramble for tax advice as Beijing targets offshore trusts Offshore trusts, long used by China's ultra-rich to store wealth, now face multiple tax events — at a 20% rate each. The new rules cover assets transferred to the trusts since the start of 2023, on which back taxes must be paid by Oct. 22 this year. Coming up Aug. 17: Retail sales, industrial production and fixed-asset investment data Aug. 19 - 23: World Robot Conference in Beijing Aug. 22 - 26: World Humanoid Robot Games in Beijing