Hollywood has increasingly been looking east, encouraged by the recent relaxation of the quota on foreign films allowed into China and the popularity of Hollywood-made but China-based international blockbusters such as Kung Fu Panda 2.

China has long kept up a barrier against foreign films — wary of insidious cultural influences while sheltering its own filmmakers. Officials last raised the annual cap on foreign movie imports as a condition of joining the WTO in 2001. The recent increased foreign movie quota is a belated response to a trade dispute the U.S. won nearly three years ago.

Walt Disney Co. said it would join an initiative to develop China's animation industry, marking the latest push by Hollywood to expand into the world's most populous country.

China's booming film industry is attracting interest from Hollywood heavyweights, as they chase bigger box-office returns to offset tighter margins at home...Films with Asian and especially Chinese themes are becoming more prominent after Hollywood hit a 16-year low in movie ticket sales last year, while some of its biggest studios are setting up shop in the country.

Big studios are trying to push further into China, where box office receipts rose more than a third last year to $2 billion. China represents one of the most attractive growth opportunities for the U.S. movie industry, which is facing declining North American theater revenue and slumping DVD sales.

One aspect is culture, a powerful, but as-yet poorly deployed tool in the exercise of China's soft power and public diplomacy... This is important because as the Chinese learn how to use these tools better, they will more effectively compete in the contest for hearts and minds. It's also critical if this country is ever to move from merely "Made in China" to its long elusive goal of "Created in China."