As part of the Pacific Council’s Mexico Initiative, Mexican Foreign Affairs Secretary Luis Videgaray Caso recently joined Pacific Council sustaining members to assess the state of U.S.-Mexico relations. Pacific Council Director and Chair of the Mexico Initiative Michael Camuñez moderated the off-the-record dinner discussion, which examined the state of the NAFTA negotiations and the overall bilateral relationship between the United States and Mexico.

"The Secretary expressed his appreciation for the leadership California is showing in strengthening ties with Mexico and highlighted efforts like the Mexico Initiative as being critical to ensuring the long-term vitality of the relationship," said Camuñez.

Secretary Videgaray provided a Mexican perspective on U.S. politics, and noted that public opinion of the United States in Mexico has drastically changed in the last year due to rhetoric during the U.S. presidential election season and the Trump administration’s policies on immigration and a border wall. He cited recent opinion polls showing that young Mexicans in particular had a very positive view of the United States until recently. It took decades for that positivity to manifest itself, he said, leaving Mexicans to wonder why the United States would now risk upsetting a relationship with a long-time friend, partner, and neighbor when there are many other pressing issues around the world.

Secretary Videgaray also pointed out that Mexico was shocked and confused about the Trump administration’s recent decision to terminate the Obama-era law protecting the children of immigrants, known as Deferred Action on Childhood Arrivals (DACA). He said Mexico will receive those children if the United States sends them back because it would be an economic boon for Mexico, but that Mexico still does not understand why Americans would want to give up that human capital in the first place.

Secretary Videgaray, who previously served as Mexico’s Secretary of Finance and Public Credit, also gave a generally optimistic assessment of the ongoing NAFTA negotiations, noting that there are three broad areas of focus under consideration:

1. Updating those provisions of NAFTA where there is broad consensus given changes in the world economy since the agreement’s adoption (in areas like digital trade and state owned enterprises, among others);
2. Dealing with divergent views on the role of dispute settlement mechanisms; and
3. Addressing the Trump administration’s concerns about the trade deficit.

He mentioned that the entire trade deficit with Mexico would be erased if the auto industry was taken out of the calculation. He also spoke to positive developments and success stories in Mexico, such as the reform of its energy sector, as negotiating points for them in the NAFTA talks. Secretary Videgaray agreed that there are elements of NAFTA that could be improved but argued against terminating the trade deal entirely, which would have negative consequences for the economies of Mexico, Canada, and the United States.

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s Mexico Initiative seeks to take an approach to Mexico that reflects our geography, identity, and appreciation for the international policy interests of the United States. Through the Initiative, the Pacific Council holds events, produces analysis and commentary, and fosters exchange with Mexican leaders. Learn more.

The Conrad N. Hilton Foundation’s 22nd annual Humanitarian Symposium and Prize Ceremony is returning to Los Angeles after taking place the past several years in New York, Washington, D.C., and Geneva, Switzerland. For over two decades, the Foundation has awarded the Humanitarian Prize—the world’s largest humanitarian award at $2 million—to nonprofit organizations around the world that make extraordinary contributions toward alleviating human suffering.

This year’s Symposium and Prize Ceremony will be held on October 11, 2017, at the Beverly Hilton in Beverly Hills. The theme of the event is "The Future of Humanitarian Action: Bridging Our Divides." The daylong conference will bring together international thought leaders and humanitarians with a focus on "reaching across borders, cultures, and sectors to navigate an evolving humanitarian landscape."

The Hilton Foundation, a leader in helping the world’s vulnerable and disadvantaged communities, is a supporter of the Pacific Council’s Global Water Scarcity Project. One of the foundation’s main emphases is working to guarantee sustainable access to safe water for people in sub-Saharan Africa, which it does by investing in advancing creative solutions and service delivery models, strengthening water governance by supporting local institutions and providers, and addressing knowledge gaps by collecting data on water scarcity.

"The Prize will help support our current research efforts to move forward our in-house pipeline of new, low cost products and interventions addressing a wide range of public health problems in developing countries."

Dr. John Clemens, executive director of icddr,b

The Pacific Council’s Global Water Scarcity Project aims to connect California’s water scarcity issues to international affairs ranging from trade to energy to security, and is designed to inform policy-making related to water scarcity, with the hope of helping to achieve the UN’s Sustainable Development Goals by 2030.

The recipient of the 2017 Hilton Humanitarian Prize will be the Bangladesh-based global health research institute icddr,b, which is dedicated to solving the most serious health issues facing low and middle-income countries. Based in Dhaka, Bangladesh, for more than 50 years, icddr,b has been at the forefront of innovative, low-cost health solutions that have resulted in saving millions of lives globally. The organization focuses on solving public health problems such as infectious diseases through innovative scientific research, including laboratory-based, clinical, epidemiological, and health systems research.

"We are honored to receive the 2017 Hilton Humanitarian Prize," said Dr. John Clemens, executive director of icddr,b. "The Prize will help support our current research efforts to move forward our in-house pipeline of new, low cost products and interventions addressing a wide range of public health problems in developing countries, including severe acute malnutrition and pneumonia in children, tuberculosis, and life-threatening maternal hemorrhage during childbirth."

Previous recipients of the Humanitarian Prize include the Task Force for Global Health, Landesa, and Fountain House/Clubhouse International. The Hilton Foundation is now accepting nominations for the 2018 Hilton Humanitarian Prize through October 18, 2017.

"We have a longstanding history in Los Angeles and are proud to bring the event back to our organization’s hometown."

Peter Laugharn, president and CEO of the Hilton Foundation

Speakers at the symposium and prize ceremony will include UN High Level Commissioner and Sustainable Development Goals Advocate Dr. Alaa Murabit, Los Angeles Mayor Eric Garcetti, world-renowned author Deepak Chopra, and many more. While the event is invitation-only, it will be publicly available to live stream anytime between 9:00am and 4:00pm PT on Wednesday, October 11, via Facebook or Hilton’s website.

The event’s return to Los Angeles poses a unique opportunity to grow awareness about another Pacific Council initiative, Global LA, which aims to strengthen Los Angeles as a global city and make it an international hub for business, culture, the arts, and more. 

"We have a longstanding history in Los Angeles and are proud to bring the event back to our organization’s hometown," said Laugharn. "As today’s world is increasingly divided, our annual symposium serves as a gathering for thought leaders from various sectors to identify impactful ways to bridge divides and explore solutions to extraordinary challenges."

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

Isabella Lloyd-Damnjanovic was the Communications Fellow at the Pacific Council on International Policy.

For more information on the Hilton Foundation and its Humanitarian Symposium and Prize Ceremony, please visit www.hiltonfoundation.org.

The results of Germany’s recent federal election will have a broad impact on the Eurozone, the NATO alliance, U.S.-German transatlantic relations, and the future of the European project, Ms. Heather Conley and Dr. Constanze Stelzenmüller told Pacific Council members in the fifth and final installment of the Pacific Council’s Summer Teleconference Series.

Conley is the senior vice president for Europe, Eurasia, and the Arctic at the Center for Strategic and International Studies. Stelzenmüller is a Robert Bosch senior fellow in the Center on the United States and Europe at the Brookings Institution. The discussion was moderated by former U.S. Ambassador to Germany John B. Emerson.

This discussion took place before Germany’s federal election, which was conducted on Sunday, September 25, and resulted in German Chancellor Angela Merkel winning reelection to a fourth term. Conley, Stelzenmüller, and Emerson all predicted that Merkel would win, but also pointed out the possibility that Alternative für Deutschland (AfD), a far-right, euro-skeptic, anti-immigrant, populist political party would win seats in the Bundestag for the first time, which it did. AfD won 12.6 percent of the vote and came in third after Merkel’s Christian Democratic Union of Germany and Christian Social Union in Bavaria (CDU/CSU) at 32.9 percent and the Social Democratic Party of Germany (SPD) at 20.5 percent.

"There are a whole lot of implications and possible directions coming out of this election that will not only impact what happens in Germany in the next four years but will have a broader impact on the Eurozone and the NATO alliance and obviously our own transatlantic relations."

John Emerson

Emerson laid out the pressing questions before the election: will Angela Merkel be granted a fourth term as chancellor? Will SPD leader Martin Schulz, who stepped down as the president of the European Parliament, be able to lead the Social Democrats back into the Chancellery, a place they have not occupied since the Gerhard Fritz Kurt Schröder chancellorship? Will the Bundestag grow from four parties to six? Will a far-right political party enter the Bundestag for the first time in over half a century?

"The most interesting question is not so much who’s given the right of putting together a governing coalition as chancellor, but what that coalition might well look like," said Emerson. "You don’t have to dig very deeply to see that there are a whole lot of implications and possible directions coming out of this election that will not only impact what happens in Germany in the next four years but will have a broader impact on the Eurozone and the NATO alliance and obviously our own transatlantic relations."

Conley agreed, adding that the governing coalition’s position on Russia, NATO, defense spending, and the future of European integration will be particularly important. Stelzenmüller said that although this was long seen as a boring election with a foregone conclusion, it had become a nail-biter in the final stretch because AfD inched into third place.

"AfD is extremely right-wing, it’s anti-democratic, it’s racist, it’s anti-Semitic, it contains people who are really on the outer right-most fringe of the German political spectrum," she said. "While they are unlikely to coalition with anybody, they are sure to change the tone and darken the political debate in Germany."

"This is going to be a test of character for many parliamentarians, and it’s going to be a test for German democracy and for Europe and the western alliance."

Constanze Stelzenmüller

Stelzenmüller said coalition negotiations may take months.

"The AfD will do everything it can to disrupt and provoke in the Bundestag," she said. "This is going to be a test of character for many parliamentarians, and it’s going to be a test for German democracy and for Europe and the western alliance."

Emerson said that he always thought Germany had a "built-in speed brake when it came to the possibility of a surge of a right-wing party, and that of course is its history." Nevertheless, he acknowledged that AfD is gaining momentum.

"What we’re seeing in the former East Germany is that the AfD and Die Linke [Germany’s far left political party] are crowding out the political center," said Conley. "The east is becoming in some ways extremely polarized. We need to reflect on this. Nearly 25 years after reunification, what does this mean?"

Conley also pointed out that Germany—as well as most advanced liberal democracies—are struggling with a leadership challenge.

"Chancellor Merkel has been incredibly successful in eliminating all of her competitors, but it is not clear who succeeds her after this term, because this will be her final term," she said.

"There are real threats out there, from Russia and elsewhere. Those who are less interested in NATO are going to have to invest in a European army."

Constanze Stelzenmüller

On the issue of raising Germany’s defense spending to 2 percent of GDP in its commitment to NATO, Emerson pointed out that the debate is not new.

"This was an issue that President Obama raised in literally every single bilateral meeting that I participated in between him and the chancellor, and there were a number of them," he said. "We made a lot of progress on it. We weren’t moving as fast as some would like but we saw in the last year and a half some real dollar progress in the last couple of budgets. Part of the problem with public jawboning, which is what we’ve seen recently, is that it makes the politics of getting something like this done even more challenging. That’s because it’s always hard for a leader to try to convince their country and fellow politicians to go along with a proposal that another country’s leader is publicly demanding that you do. It makes you look weak or inconsequential."

Stelzenmüller argued that Germany must not only spend and invest more on defense and security on behalf of its own national interests, but also on behalf of Europe and NATO.

"There are real threats out there, from Russia and elsewhere," she said. "Those who are less interested in NATO are going to have to invest in a European army."

"We have to recognize that Germany is leading the NATO battalion in Lithuania, they have forces in Mali and Afghanistan, and sometimes we don’t tout enough what the Germans are doing."

Heather Conley

Conley agreed that Germany has made progress in this area. Germany currently spends about 1.2 percent GDP on defense and have committed to raising that to 2 percent by 2024.

"They have been substantially increasing that amount," said Conley. "We have to recognize that Germany is leading the NATO battalion in Lithuania, they have forces in Mali and Afghanistan, and sometimes we don’t tout enough what the Germans are doing. That said, the Germans recognize that they have to do more because maintaining these forces and keeping an operational tempo up is a strain. Now with terrorism, there’s an internal security dimension to this as well."

Stelzenmüller pointed out that the general strategic debate about Germany’s military involvement and defense spending has "become a lot more muscular than it has been in the past. Last year’s defense white book was a case in point," she said, referring to the Bundeswehr’s 2016 White Paper on German Security Policy and the Future of the Bundeswehr. "By German standards, that was a white book that—if a [new] government is willing to implement it—could make Germany’s allies including America very happy."

Listen to the full conversation below:

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

Read summaries of the previous discussions in the Pacific Council’s Summer Teleconference Series on America’s role in the South China Sea, Iran and Saudi Arabia’s proxy conflict in Yemen, South Asia’s water scarcity crisis, and changing security dynamics in the U.S.-Russia relationship.

The views and opinions expressed here are those of the speakers and do not necessarily reflect the official policy or position of the Pacific Council.

The United States and Russia may have an adversarial relationship, but that does not mean they cannot cooperate on issues of mutual concern and interest, Dr. Agnia Grigas and Dr. Vidya Nadkarni told Pacific Council members in the fourth installment of the Pacific Council’s Summer Teleconference Series, on the changing security dynamics of the U.S.-Russia relationship.

Grigas is a nonresident senior fellow at the Atlantic Council. Nadkarni is a professor of political science and international relations at the University of San Diego. The conversation was moderated by Dr. Robert English, associate professor and former director of the School of International Relations at the University of Southern California.

President Trump has inherited a relationship with Russia fraught with more tension than at any point since the Cold War. Russia’s 2014 invasion of Ukraine sparked fear that its belligerence could threaten the territorial integrity of NATO’s eastern members while raising questions about NATO’s ability to deter Russian aggression in its immediate neighborhood and beyond. In the Middle East, Russia obstructs U.S. policy in Syria by arming the Assad regime and providing diplomatic cover for its assaults on U.S.-backed Syrian rebels. Meanwhile, several investigations are underway in the United States to determine the impact Russia had in influencing the outcome of the 2016 presidential election.

"Since the end of the Cold War in 1989, the U.S.-Russia relationship has always had an adversarial element, but this has not precluded pragmatic, bilateral cooperation between the two," said Nadkarni. "President Vladimir Putin was one of the first world leaders to extend a hand in cooperation after the 9/11 attacks, providing both intelligence and logistical support for Operation Enduring Freedom in Afghanistan."

"Russia’s role in Syria, Moscow’s increasingly assertive military moves in response to what is seen as NATO provocation, and the issue of sanctions will continue to roil the bilateral relationship between Russia and the United States."

Vidya Nadkarni

Nadkarni cited other examples of U.S.-Russia cooperation, including President Obama’s 2009 relations "reset." However, tensions have been under the surface with missed opportunities over the years, she said. With Putin’s return to the presidency in March 2012, U.S.-Russia relations took a pronounced downward turn. Nadkarni said that Putin was mistaken when he blamed then-Secretary of State Hillary Clinton for inciting widespread protests in Moscow and other major cities against his 2012 election and claimed that the United States was either directly or indirectly behind all the protest movements in the post-Soviet space. In reaction, Putin attempted to block Clinton’s election to the presidency in the 2016 election.

"So far, Moscow is alleged to have intervened by hacking the Democratic National Committee’s servers and subsequently releasing selected emails through WikiLeaks, and by disseminating fake news and propaganda and using online amplifiers to spread the information to as many internet users as possible, all in an effort to thwart the election of Hillary Clinton," said Nadkarni.

In response to Russia’s election meddling, President Obama ejected 35 Russian diplomats from the United States, confiscated two Russian compounds, and placed sanctions on Moscow, which Putin hoped the incoming Trump administration would rescind. When it did not, Russia retaliated by cutting and capping staff levels at the U.S. embassy in Moscow. Trump responded by halting non-immigrant visas from Russia and ordering Russia to close its consulate in San Francisco and two diplomatic annexes in New York and Washington, D.C.

With escalating retaliatory moves taking place, Nadkarni and Grigas do not see the adversarial aspect of the U.S.-Russia relationship changing in the near future.

"The future of U.S.-Russia relations is likely to be fraught and increasingly fractious," said Nadkarni. "Russia’s role in Syria, Moscow’s increasingly assertive military moves in response to what is seen as NATO provocation, and the issue of sanctions will continue to roil the bilateral relationship."

"If Russia seeks this great power role in its neighborhood in the 21st century, the current approach it is pursuing—cyber warfare, spreading propaganda and misinformation, sponsoring wars—is not going to make it very easy for them."

Agnia Grigas

Grigas agreed, however, that U.S.-Russia cooperation is possible, considering it has happened in the past when the relationship was even more adversarial.

"The United States and Russia are not geopolitical allies, they’re actually more like rivals," she said. "At the same time, it is a fact that even during the height of the Cold War, the United States and the Soviet Union—despite being geopolitical rivals—did find room for cooperation and common ground on issues that are of core importance to them.

"Nonetheless, today they are nowhere near semi-equal powers as they were during the Cold War," Grigas continued. "Russia certainly is a diminished power. If Russia seeks this great power role in its neighborhood in the 21st century, the current approach it is pursuing—cyber warfare, spreading propaganda and misinformation, sponsoring wars—is not going to make it very easy for them."

Grigas said she does not believe that Putin’s leadership has been the sole factor in the souring of U.S.-Russia relations in the past 10 years, nor does it explain all of Russia’s geopolitical ambitions or aggressive behavior.

"Russia and the United States still have quite a different worldview," she said. "Even though communism is no longer Russia’s ideology, it still contrasts with the liberal democratic order led by the United States."

"As the United States and other new energy producers eat up shares of Russia’s energy market, things are going to get worse for Russia. Then we will really see if the people rise up and change the regime or the economy."

Agnia Grigas

Grigas pointed out that the United States was not the only western country in which Russia used its data hacking and misinformation campaign.

"We saw Russia’s role in trying to sway the Brexit vote in the United Kingdom, the reform referendum in Italy, and the national elections in the Netherlands and France, and of course Germany is gearing up for its own national election and they are already preparing for Russian cyber-attacks and trying to mitigate information warfare," said Grigas. "Russia’s toolkit has been directed toward the West, very much in a Cold War fashion."

Grigas added that Americans should keep in mind that the Russian public is not anti-American in general and that not everyone supports Putin’s government, though it may seem that way.

"There’s a lot of violence from the government in cracking down on any sort of resistance right now," she said. "How bad would it have to get for people to really go out massively into the streets? It will have to do with the economy. We really have to watch the energy market, because Russia is largely dependent on oil and gas revenues for its livelihood. Meanwhile, the United States has emerged as an energy superpower. As the United States and other new energy producers eat up shares of Russia’s energy market, things are going to get worse for Russia. Then we will really see if the people rise up and change the regime or the economy."

Listen to the full conversation below:

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s Summer Teleconference Series continues with a discussion about Germany’s upcoming election on September 21. Read summaries of the previous discussions in the series here.

The views and opinions expressed here are those of the speakers and do not necessarily reflect the official policy or position of the Pacific Council.

The first round of negotiations between the United States, Mexico, and Canada over the North American Free Trade Agreement (NAFTA) took place August 16-20 in Washington, D.C. The talks were the first of several scheduled rounds between now and the end of the year, when the three nations hope to conclude a deal.

At the outset, U.S. Trade Representative Robert Lighthizer delivered a list of demands on behalf of the White House, including an overhaul that would cut U.S. trade deficits and increase the use of regional parts for autos produced in North America. Lighthizer went on to say that the Trump administration believes that NAFTA has "fundamentally failed" Americans and is in need of "major improvements." Representatives from Canada and Mexico said the current agreement is not tilted against the United States.

President Trump recently wrote on Twitter that he is considering terminating NAFTA because he claimed Mexico and Canada are "being very difficult" in the negotiations. He wants the United States to "get a better deal."

Pacific Council Directors Mickey Kantor, former U.S. Commerce Secretary, and Michael Camuñez, former U.S. Assistant Secretary of Commerce for Market Access and Compliance, agreed that NAFTA needs to be updated, but urged the president in media interviews not to pull the United States out of the agreement entirely.

"It is critical for us to begin to make changes in NAFTA, but we need to make sure we don’t throw out the baby with the bath water."

Mickey Kantor

"It is critical for us to begin to make changes in NAFTA, but we need to make sure we don’t throw out the baby with the bath water," Kantor told Bloomberg. "Bob Lighthizer has a president who has engaged in unfortunate rhetoric and he’s trying to be somewhat consistent with that. But I don’t think you should take what is said publicly as compatible with what might be said privately.

"At the beginning of negotiations, you’re trying to position yourself," Kantor continued. "[Privately], you’ve got to build respect and trust with people across the table... What people may not understand about trade negotiations is that even though there may be three sovereign nations involved who have a whole history of reliance on each other, it comes down to people."

According to Forbes, the United States had a $64 billion trade deficit with Mexico in 2016. In the first half of 2017, that deficit was $37 billion, compared to $1.6 billion in 1993, NAFTA's first year, according to U.S. Census Bureau data. The U.S. trade deficit with Canada is about $10 billion, a low point following 2005's $78 billion.

Camuñez said an upgraded NAFTA will ultimately be beneficial to both the United States and Mexico, where his firm Monarch Global Strategies works with U.S. companies looking to expand.

"Companies recognize NAFTA needs a facelift," Camuñez told Forbes. "At the core, they understand that NAFTA is essential to the competitiveness of all three countries."

"Had the Trump administration already racked up a few legislative accomplishments, they might be feeling much more bullish and aggressive in their willingness to take a firm stance on some of the political bluster and rhetoric they’ve been pushing with Mexico."

Michael C. Camuñez

Camuñez pointed out that both the U.S. and Mexican governments likely want to conclude the negotiations before the U.S. congressional midterm elections and the Mexican presidential election in fall 2018. Therefore, the end result of the talks will likely only cover the simpler issues, which Camuñez said the Trump administration may want to portray as a "major modernization" of the agreement as promised.

"Had Trump scored a victory in the repeal of Obamacare, had he already racked up a few legislative accomplishments, the administration might be feeling much more bullish and aggressive in their willingness to take a firm stance on some of the political bluster and rhetoric they’ve been pushing with Mexico," said Camuñez. "But the reality is that the administration has floundered and has virtually no legislative accomplishments to speak of, and that actually works in favor of a more reasonable outcome for the NAFTA renegotiations."

Kantor said he thinks the negotiations will be successful if the new NAFTA creates jobs, wealth, production, and higher incomes in all three countries, like the original NAFTA did.

"U.S. exports to Mexico have grown 400 percent since NAFTA started," he said. "They are almost as large as all of U.S. exports to all of the European Union countries combined. The fact is that Mexico is a major market for the United States, as is Canada. The three together are the largest trading market in the world."

Kantor added that it is critical that NAFTA is updated and not terminated entirely.

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council's Mexico Initiative will continue to monitor the ongoing NAFTA negotiations. Under the auspices of the Mexico Initiative, chaired by Michael C. Camuñez, the Pacific Council holds events, produces analysis and commentary, and fosters exchange with Mexican leaders. Learn more.

Legend has it that in 1964 San Francisco, a martial arts fight took place between a scruffy young Bruce Lee and kung fu master Wong Jack Man. The fight became an important part of martial arts history and inspired George Nolfi’s latest film, Birth of the Dragon, released this week in the United States.

Nolfi, a Pacific Council member, directed the homage to a classic kung fu film, which is set during the mid-20th century when Bruce Lee started to practice Wing Chun, a Chinese martial arts form and school of thought, in the United States. Lee became a Hollywood celebrity after starring in American kung fu movies in the 1970s. According to Nolfi, Lee believed Chinese martial arts should be a global practice instead of confined to China, as some more traditional Chinese martial artists maintained.

Birth of the Dragon was filmed in China, San Francisco, and Vancouver, and the experience allowed for a deep cultural exchange between the filmmakers and Chinese leaders of kung fu, who expressed enthusiasm and openness to sharing martial arts with new audiences. Kylin Pictures International, a Chinese film financier, financed Birth of the Dragon as well as other recent American films, including Mel Gibson’s Hacksaw Ridge.

Entertainment, media, and creative services—with the potential to reach and influence billions of people worldwide—could serve as an important tool in recasting Chinese and Americans' perceptions of one another.

Nolfi’s film is a product of the burgeoning relationship between Hollywood and China, demonstrated by increased Chinese investments in American studios and films. Last year, Steven Spielberg’s entertainment company, Amblin Partners, signed an agreement with Jack Ma’s e-commerce conglomerate, Alibaba Group, to co-produce and co-finance movies. Furthermore, in 2016 the Chinese firm Dalian Wanda Group (DWG) purchased Legendary Entertainment, which produced The Dark Knight, Jurassic World, and several other blockbusters, for $3.5 billion. DWG has also purchased AMC.

Entertainment, media, and creative services—with the potential to reach and influence billions of people worldwide—could serve as an important tool in recasting Chinese and Americans' perceptions of one another. As Pacific Council President and CEO Dr. Jerrold D. Green wrote in a June 2016 report, "There is a natural opportunity here to use entertainment as a medium for public diplomacy messaging. The more we learn about China and the more they learn about us, the more likely and able both sides will be to update narratives of one another and to begin a more meaningful and far deeper level of engagement."

There is big money for Hollywood studios to make in China. Hollywood accounted for 42 percent of China’s box office in 2016. That year, China’s homegrown film industry released 1,000 movies, but they only made about $2 million each in China compared with the $70 million on average that Western movies made in China. The Los Angeles Times reported that almost every Chinese film company is facing financial difficulties.

While in recent years Chinese investment in Hollywood has grown, the trend has slowed down in 2017. This is due in large part to the Chinese government’s prohibition on the exchange and export of currency and therefore investment in foreign firms, which Hollywood benefited from significantly.

And from a creative perspective, financial involvement by Chinese companies is having adverse effects on the films. With its investment, China also wants creative control in the form of censoring messages it does not want to reach Chinese audiences.

One example is The Great Wall, which was funded largely by Chinese-owned firms Legendary Entertainment and China Film Group along with Universal Pictures. The film’s narrative portrays China in a positive light, with Matt Damon defending the Chinese state against invaders. The movie tanked in North America and China, earning just $34.8 million in North America and $171 million in China, much less than investors, who lost $75 million on the film, anticipated. China responded to negative reviews of the film by censoring them.

With its investment, China also wants creative control in the form of censoring messages it does not want to reach Chinese audiences.

Another controversy in the Hollywood/China relationship is "whitewashing," when white actors are cast to play traditionally non-white roles. There is a long history of white actors playing Asian characters in Hollywood films that continues today. Casting decisions such as Damon in The Great Wall and Scarlett Johannsson in Ghost in the Shell were met with widespread criticism. Adding to the controversy, a 2015 USC report found that white actors make up an average of 75.2 percent of speaking roles in top-grossing fictional films. For their part, Hollywood studios say Chinese audiences want to see American celebrities.

Nolfi notes that Birth of the Dragon was written by westerners but produced with Chinese executives, and 22 of the film’s 23 speaking roles belong to Asian or Asian-North American actors. The movie is a Hollywood take on an event that is strictly Chinese in culture, but chronicles a moment of historical cross-cultural exchange that anyone who has practiced martial arts or seen a Bruce Lee film can appreciate.

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Marissa Moran is the Senior Communications Officer at the Pacific Council on International Policy.

Justin Chapman is the Communications Associate at the Pacific Council on International Policy.