China's ever-increasing role in the decisions Hollywood makes have been an urgent topic of discussion for years now; various projections all conclude the country should be the second-biggest market in the world by the end of this decade. Consider "Iron Man 3": as of pretty much right this second, China has contributed 10% of the film's nearly $1.2 billion worldwide gross, one reason why Marvel was ready to hire a consulting agency to help it gain official approval. Like two recent releases — "21 & Over" and "Looper" — the strategy was to create China-only footage that would win the authorities' approval to make it one of the 34 foreign films released in the country this year. That strict quota can be evaded by making an official co-production, but the rules for that are stringent: 30% of the production funds have to come from China, 30% of cast and/or crew must be Chinese, and the film must meet the nebulous standard of reflecting Chinese values and themes. (The major example so far being the 2010 remake of "The Karate Kid," though the final product was still recut to meet the censors' standards.)

Or you can just lard the movie with gratuitous, for-China-only footage and hope you're one of the lucky 34. So far, this strategy's yielded mixed results: good grosses, annoyed audiences. "Iron Man 3" made bank, but audiences were widely reported as being nonplussed by the insertion of clearly gratuitous scenes, including an extended interlude in which Tony Stark flies to China, because only there can he receive the appropriate standard of care necessary for heart surgery. Their disgruntled response was mirrored in state-run newspapers and news broadcasts; what appealed to government censors was equally distastful to audiences and other official outlets. (In an email, Sam C. Mac, currently in China, recalled "the audible booing of a few patrons down in front when the longest of these scenes -- in which a doctor dryly lectures his nurse -- dragged on and on.")

Chinese viewers were similarly unpleased by the insertion of extended Shanghai sequences in last year's "Looper," which stood out for the gratuitous pace-disrupters they were. The $20 million grossed in China still constituted a little more than a ninth of the total worldwide theatrical gross, suggesting Chinese audiences are still willing to go see something they know will be filled with censor-pandering nonsense. (The irony here is that "Looper"'s visions of a China-dominated feature and attendant Shanghai interlude, strategically necessitated or not, would perhaps play even better to Americans worried about their international future than the ostensible target for such extended sequences.)

There's an even more gratuitous example of this kind of futzing to get past the censors to disgruntled but paying Chinese audiences, but let's back-track for a second and consider the types of film that can be released in China with no compromises necessary. Last week, "Fortune" magazine conducted its 18th annual Global Forum, conducted in the city of Chengdu, described on the event's official website as "an energetic growing city in southwestern China that is both a symbol and the reality of the 21st century global economy." As part of these events, Dreamworks Animation CEO Jeffrey Katzenberg spoke about his company's experience releasing films in China. It's a fascinating speech, well worth reading in full (if only for the bit where Katzenberg claims his major text for understanding the country was Henry Kissinger's 2011 book "On China"). One of the money quotes is Katzenberg noting that "of more than a dozen movies that we have brought here [...] we've actually never been asked to change a single frame of a single film." Because of this, Katzenberg concluded that "there is an underlying compatibility between the stories we like to tell, the way in which we like to tell them, and the moviegoing audience here in China." As proof, he noted that "four of China's top five animated films are from Dreamworks," and that their latest release "The Croods" was now "actually their highest grossing original animated movie of all time."

There are two notable things about this last statement. One is that Katzenberg is spinning an entire room of people who don't need to be spun, with the key modifier here being "original." That is, there have been higher grossing animated movies in China, but they were sequels ("Kung Fu Panda 2," "Ice Age: Continental Drift"). Katzenberg knows perfectly well all a normal person will hear is "highest grossing," but still he uses the evasive language of big studio publicists to artificially inflate the film's success without technically lying. The other important thing about this statement is that it sounded like "The Croods" was still in theaters, but it wasn't: it was pulled from theaters two weeks early (because of a "contract dispute," which could mean anything).

What's germane is that by pulling "The Croods" (after "Iron Man 3" had wrapped its run), China created a three-week period during which there was no Hollywood product to compete with, ensuring the success of "Switch," a heist movie whose producers include the China Movie Channel and China Film Group, both state-administered entities. If that seems like collusion to enrich businesses whose principal beneficiaries are related to government officials, it's entirely possible. Last year, the "New York Times" reported on the presence, throughout Chinese business, of relatives of those in power, noting that for example DreamWorks Animation had partnered with three Chinese businesses to built an animation studio in China. They chose not to trumpet that one of these businesses (China Alliance) is partially controlled by Jiang Mianheng, son of powerful former Communist Party leader Jiang Zemin.

Let's focus on "The Croods" for a bit longer. While it was in release, its success prompted internal national dialogue on how the film's success pointed to shortcomings in domestic Chinese production. The state-financed "Beijing Youth Daily" wrote a piece entitled "Domestic Animation Films Urgently Need To Discover High-Class Children-Friendly Fun," which pointed to how "The Croods" "could be released amidst blockbusters and still bring in adult viewers" (unlike distinctly unappetizing homegrown titles like "The Adventures of Sinbad 2013"). One advantage American studios have in this department is sheer monetary capital: "The Croods" is a visibly expensive product, the likes of which Chinese animation can't hope to match at this time. But there's a corollary to this kind of editorial in a larger debate about the types of films the Chinese film industry should be focused on creating. The biggest release of 2012 was "Lost In Thailand," a light-hearted comedy that's currently the top-grossing domestic Chinese film ever, one whose success dwarfed the release of "Back To 1942," a decidedly sober-minded movie about a drought that year that resulted in the death of three million people. "We need popcorn but we also need bitter pills," the "People's Daily" sniped — a decidedly un-American viewpoint Chinese viewers at large don't seem to share.

Indeed, the state's ideas about the kind of movies its citizens should crave have often proved inept in execution. In 2009, the Chinese government announced its intention to release 50 movies commemorating the 60th anniversary of the Chinese revolution. One of these titles was the unappetizing "The Founding Of A Republic," with the government offering discounted tickets for those attending the film. The result was a movie that made money and fulfilled the fundamental task of projecting the illusion that millions of Chinese viewers hunger for the type of inept, talking-point-heavy propaganda the USSR used to specialize in. In reality, theaters resorted to tactics like selling tickets to "The Founding Of A Republic" while writing the name of the movie their patrons were actually watching on the paper.

To recap: Hollywood studios face seemingly arbitrary censorship demands and the constant possibility that their too-successful films will be pulled to give domestic products some breathing room, but still find that to be an acceptable cost of doing business. For their part, Chinese audiences scoff at gratuitous footage shot to appease censors, but seem willing to tolerate it for the sake of catching some big-budget spectacle. Piracy, too, is still an acceptable mitigating factor for theatrical access, at least for now. In 2010, a state-issued report noted that the country's pirate DVD industry had grossed $6 billion in 2010, four times as much as that year's box-office receipts. This industry was shown in startling detail in Wu Wenguang's starling 2005 documentary "Fuck Cinema", one of whose strands follows a pirater whose wares run the eclectic gamut of all kinds of smaller foreign art-oriented films that wouldn't have a prayer of being among the lucky few selected for theatrical distribution (his stock includes everything from Abbas Kiarostami to Woody Allen). Such movies are probably still condemned to perpetual piracy for the moment, though film writer Kevin B. Lee noted in an email that "CD/DVD piracy has dissipated significantly with the greater accessibility of torrents - it's kind of analogous to the demise of video stores in the US and elsewhere."

The big force in legal streaming currently is Youku Toudu, which spent $118.3 million last year on content acquisition. As part of their efforts to to attract new eyeballs, the company has an anti-piracy team that in mid-April reported that possibly up to 1,995 small piracy sites were available for Chinese web users. While two big piracy websites were shut down by the authorities in April, the problem is still far from solved; the vital post-theatrical grosses Hollywood so craves are in their infancy in China. (The more successful growth market here is American TV; Youku Toudu claims Chinese consumption of those shows increased 400% between 2011 and 2012.)

What's all this mean for American viewers? More films shot in China, for starters ("Transformers 4" is shooting there) with more Chinese actors (the same logic led to Li Bingbing being cast in the film). But Hollywood will keep most of the evidence of this kind of activity out of American multiplexes. The most important article on the topic published so far this year about the compromises of studio filmmaking bending to Chinese whims concerned one of the year's worst films, "21 & Over." In the American version of this inane "Harold & Kumar" and "Superbad" hybrid, two guys have to get their passed-out Chinese-American buddy Jeff Chang home. (The movie's respect for this character is indicated in the end credits, which give his name as one word, yelled frantically and repeatedly: "JeffChang.") The point of the American version is that Jeff realizes he doesn't want to be a doctor and stands up to his traditionalist dad, but in the Chinese cut he's a Chinese transfer student who wakes up, realizes how terrible American lack of discipline is, and returns home to become a diligent doctor for the homeland. This, the "Los Angeles Times" noted, gives the film the special distinction of not only giving "the film a different feel but in fact also actively casting the U.S. in a bad light." Watching the movie, you're acutely aware that the Asian character is on-screen as a business strategy to gain Chinese funds first and foremost, rather than an independently realized character. It's a new low for a Hollywood studio bending over backwards to crash a new market, but don't expect it to be the last.