Working Paper: NBER ID: w29999
Authors: Haichao Fan; Yichuan Hu; Lixin Tang; Shangjin Wei
Abstract: The US trade war against China in 2018–2019 can either enhance or diminish the US soft power in China, depending on whether it is recognized as legitimate by Chinese citizens. We study how the viewership of US movies—an important element of the US soft power—is affected by the trade war, utilizing variations across Chinese cities in the exposure to the Trump tariffs. We find a significant reduction in US movie revenue in regions more exposed to the Trump tariffs, but no corresponding reduction in the consumption of non-US movies. This is corroborated by a decline in online search for US movies, US tourist destinations, and US branded sports shoes. The aversion to US movies appears to persist at least to 2021. The effect is somewhat milder for more affluent people.
Keywords: US soft power; trade war; China; US movies; cultural diplomacy
JEL Codes: F10; F60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trump tariffs (F19) | US movie revenue decrease (F69) |
| Trump tariffs (F19) | online search activity for US movies decrease (L82) |
| US movie revenue decrease (F69) | non-US movie consumption unchanged (F61) |
| Tariff exposure (F31) | US movie revenue decrease (F69) |
| Tariff exposure (F31) | reduced online search activity for US movies (L82) |
| Affluence (I31) | milder impact of tariff exposure on US movie revenue (F69) |
| Government restrictions on movie imports (L82) | US movie revenue decrease (F69) |