MW China made the world's biggest movie this year, and - in a sea change - it didn't need America to do it

Tanner Brown

China's domestic film industry now has the scale to produce global box-office leaders on its own - even as it flexes make-or-break power over the fate of Hollywood's biggest movies

Buildings in Chengdu, in China's Sichuan province, were lit up in February with images of characters from the movie "Ne Zha 2," which grossed more than $1.8 billion in China alone.

For years, Hollywood executives have treated China as a tantalizing but unreliable prize: a massive audience that could supercharge a blockbuster's global haul, yet one governed by opaque rules, shifting tastes and sudden political constraints. In 2025, that uneasy relationship entered a new phase.

Two of the world's top-grossing films this year were sequels with something crucial in common: that both owed an extraordinary share of their box-office success to China.

It is increasingly clear that China no longer needs Hollywood in the way it once did.

One was "Ne Zha 2," a domestically produced Chinese animated film that became the highest-grossing movie in the world largely on the strength of its home market. The other was "Zootopia 2," a Hollywood release whose global blockbuster status depended heavily on Chinese audiences.

Taken together, they suggest a shift that markets and studios alike are still digesting. China is now big enough to mint a world-beating movie almost entirely on its own - and powerful enough to decide whether a Hollywood tentpole merely succeeds, or becomes truly historic. At the same time, it is increasingly clear that China no longer needs Hollywood in the way it once did.

The headline shock came from "Ne Zha 2." The sequel shattered domestic records, grossing more than $1.8 billion in China alone, according to Box Office Mojo - a figure that by itself placed it at or near the top of the global box office. That outcome would have been unthinkable a decade ago, when even China's biggest hits still relied on some level of international contribution to reach global prominence.

This was not just a commercial win; it was a demonstration of industrial scale. A single national market, protected by quotas and dominated by local intellectual property, proved capable of generating a global No. 1 film without meaningful reliance on North America or Europe. For global investors accustomed to seeing Hollywood exports anchor worldwide rankings, that is a structural change worth noting.

Without China, 'Zootopia 2' would still have been a success. With China, it became one of the year's defining global hits.

"The film achieved such phenomenal box-office success primarily due to its outstanding word-of-mouth reputation. The characters, story, special effects, thematic depth and dramatic elements all met or even exceeded audience expectations," Hu Jianli, secretary-general of the China Literature and Art Critics Association, told MarketWatch.

If "Ne Zha 2" showed China's growing self-sufficiency, "Zootopia 2" revealed the other side of the coin. The Disney $(DIS)$ sequel earned more than $500 million in China, accounting for nearly half of its global box-office total during its theatrical run. Without China, "Zootopia 2" would still have been a success. With China, it became one of the year's defining global hits.

That contrast underscores a crucial nuance. China used to be a growth market for Hollywood, but is now better understood as a gatekeeper - a market that can determine whether a movie becomes a true global phenomenon, said Chris Fenton, a former China-based media executive and author of "Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA, & American Business."

A handful of foreign films - particularly family-friendly animation and broadly apolitical spectacles - can still break through in a major way. Most cannot.

The broader data reinforce that interpretation. China's total box office rebounded strongly in 2025, surpassing 50 billion yuan ($7 billion), according to official figures, with domestic films accounting for more than 80% of ticket sales. Hollywood's market share, by contrast, has shrunk to a fraction of its former level, hovering in the low single digits in recent years.

From the archives (February 2023): Chinese moviegoers - starved for entertainment and craving normalcy - are set to put the country's film industry back on top

Even when U.S. studios do score a hit, the financial upside is constrained. Under China's long-standing revenue-sharing system, foreign producers receive roughly 25% of box-office receipts - far less than they would earn in North America or in most other major markets. That makes China a high-impact but low-margin opportunity, one that can boost global prestige without necessarily transforming studio balance sheets.

China used to be a growth market for Hollywood but is now better understood as a gatekeeper - a market that can determine whether a movie becomes a true global phenomenon.Chris Fenton, author and former China-based media executive

For investors and executives, the implications are subtle but important. China is now too large to ignore as an audience, yet it's too unpredictable to anchor a global business model. The era when studios could reliably pencil China into their box-office forecasts has effectively ended. In its place is a more cautious calculus: China as volatile upside, not a guaranteed pillar.

Representatives of Paramount $(PSKY)$ and Warner Bros. $(WBD)$, the studios behind the top 2025 hits, did not respond to MarketWatch requests for comment on Hollywood's take on China's role in an evolving movie-industry landscape.

So has 2025 represented a tipping point toward a deeper U.S.-China split in global cinema? Probably not in the form of a sudden break. Chinese audiences have shown they will still embrace the right foreign films, and regulators have demonstrated flexibility when commercial and cultural interests align, Hu said. But the long-term trajectory points toward bifurcation rather than reintegration.

China's film industry is increasingly oriented inward, producing domestic franchises with global-scale economics. Hollywood, meanwhile, is learning - sometimes painfully - that global success no longer requires Chinese approval but also that true global dominance may be impossible without it.

In 2025, the world's biggest movie did not need America. Another needed China. That tension, more than any single record, may be the clearest sign yet of how the global box office has changed.

Tanner Brown covers China for MarketWatch and Barron's.

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-Tanner Brown

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December 31, 2025 13:28 ET (18:28 GMT)

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