Po, the Kung Fu Panda, may look like an innocuous, chubby animal, but he could turn out to be the most devastating double agent on the world stage since Mata Hari shimmied her way to infamy in the first world war. Last week, the sequel to the Chinese-themed, US-made animation broke box-office records in China, taking 125m yuan (£11m) in its opening weekend. It's great news for its creators at DreamWorks, mildly irritating news for Chinese animators and intriguing news for the rest of the cinemagoing world, coming just as a newly confident China squares up to the original moviemaking superpower.
In Hollywood, movies that borrow far-eastern exoticism to entertain western audiences are as old as Mann's Chinese Theatre – and usually as authentically Chinese. Kung fu movies have been popular in the west since the 70s, and Hong Kong cinema gained its own foothold when director John Woo exported his signature "gun fu" to Hollywood with The Killer in 1989, following in person four years later
What is new, however, is the tempting prospect of more than a billion Avatar-appreciating movie fans in mainland China. Already the world's second largest economy, China is set to overtake Japan and become the second largest cinema market after the US. According to the predictions of the China Film Producers' Association, by 2015 China will have built more than 7,000 new cinemas, and have annual box-office receipts of up to £3.7bn – which would explain Hollywood's increasingly unsubtle efforts to woo Chinese audiences. Last year's remake of The Karate Kid replaced Japanese karate with Chinese kung fu and a California setting for a Beijing location shoot. Seth Rogen's version of The Green Hornet passed over more obvious casting choices for the role of the sidekick Kato in favour of Jay Chou, who was little-known in the west, but a bankable heartthrob in the far east.
Like a suitor spurned, in 2007 the US also lodged a complaint with the World Trade Organisation over China's protectionist film distribution practices. This March's decision in the US's favour prompted speculation over whether China would relax the strict quota system for the release of foreign films. And if it did, how would that affect local film-makers? It seems the Chinese film industry has responded by remembering a favourite teaching of ancient military philosopher Sun Tzu: attack is the best form of defence.
This month, Legend of a Rabbit will open in China, the first release from a 4.5bn yuan (£420m) animation facility developed by the Chinese state as – at least in part – a response to the success of the first Kung Fu Panda film. As a challenger to the big Hollywood studios, it will join Hengdian World Studios in Zhejiang province, which since the mid-1990s has steadily grown to become the world's largest outdoor film studio. Crouching Tiger, Hidden Dragon (2000), Hero (2002) and the American martial arts film The Forbidden Kingdom (2008) all made use of the complex's historical sets, which include a full-scale replica of the Forbidden City. To call it "Chinawood" would seem a tad reductive.
Why is the Chinese government investing so generously in cinema? As Hollywood's international reach proves, a healthy film industry extending a nation's cultural reach can be as useful to a nascent superpower as any number of nuclear warheads. Or, from a perspective less tinged with cold war nostalgia, China's economic prosperity affords it the opportunity to present its own image to the world, unmediated by Hollywood.
Not that it will be easy. "The western perceptions of China as an ageless rural country with a repressive 'red' regime remain a difficult obstacle for Chinese filmmakers – other than by designing these fantastic tales of martial arts set in ancient China," says Yingjin Zhang, author of A Companion to Chinese Cinema. Raymond Zhou, a film critic and columnist for the China Daily newspaper, agrees that using cinema to introduce the real China to the rest of the world may present some difficulties. "Traditional Chinese values are mainly non-confrontational and do not make good movies," he says. "It'll take a genius to tell a quintessential Chinese story on screen and be successful all over the world."
Could that genius be Zhang Yimou? A member of the first generation of directors to graduate from the reopened Beijing Film Academy following the Cultural Revolution, he is the most internationally successful director to emerge from mainland China, and along with Ang Lee, from Taiwan, among the most important Chinese-language directors working today. His 2002 film Hero opened at No 1 in the US box office, making it the second-highest grossing foreign-language film in US history (after Mel Gibson's The Passion of the Christ) while his 2004 followup House of Flying Daggers grossed a healthy $93m (£56m) worldwide.
Yet even a director of Yimou's standing has found that foreign interest dwindles when he strays too far from the martial arts (wuxia) formula. A Woman, a Gun and a Noodle Shop, Yimou's Gansu province-set remake of the Coen Brothers' 1984 film Blood Simple, made only a miniscule proportion of Hero's $53m (£32m) box office and went straight to DVD in this country. Yimou chalks this up to cultural differences. "It's black humour and I think that has many local facets, like the language, the way they talk, the gestures and so on. So it's normal that people [in the US] don't get much of it. It didn't really bother me."
Expectations are much higher for Yimou's latest film, The Heroes of Nanking, which is scheduled to wrap this week. A big-budget historical drama about the 1937 massacre of Chinese citizens by Japanese troops, it is no wuxia spectacular, but it does benefit from the presence of a western star in Christian Bale. Fresh from his Oscar win for The Fighter, Bale plays an American priest who helps hundreds of civilians escape death. The Dark Knight is yet to open in China (Warner Bros cited "cultural sensitivities"), but Bale has a following among young Chinese thanks to the country's vigorous trade in pirate DVDs, which have long been a key way for Chinese viewers to see foreign films.
Yimou says The Heroes of Nanking was made with international audiences in mind. "First of all, the story is very international. It has a universal message about humanitarianism, about love and redemption, and also we have Christian Bale. And the other thing is almost half of it is in English." But the real strength of the film, says its Hollywood-based executive producer David Linde – who also worked on Crouching Tiger, Hidden Dragon – is that while its story is quintessentially Chinese, it has an appeal that transcends national borders. "A great signature director working with an incredibly inspiring actor? That in and of itself is thrilling. When do you get an opportunity where different cultures truly connect, in story, performance and direction? Really, very rarely."
It might seem unrealistic to expect US appetites for foreign film to broaden as fast as the Chinese appetite is growing, but Linde, who has worked with directors including Ang Lee, Pedro Almodóvar and Alfonso Cuarón, says there's hope. "There's clearly a real fascination with China. I don't know about England, but, as one small example, one of the things you're seeing a lot here is students increasingly studying Mandarin, instead of the more traditional French and Italian." And now that nervous jokes about a Mandarin-speaking future have become a mainstay of American political comedy, might curiosity about the new paymaster translate into box-office receipts? "I think that the opportunity for Chinese film-makers here is pretty significant."
What matters for Chinese film-makers, Yimou says, is not whether they will be able to reach foreign audiences, but whether they'll be able to satisfy their own. "The market is growing very fast and well-known directors don't necessarily develop at the same pace. We have an old Chinese saying: 'It takes 10 years to grow a tree, but 100 years to make a man.' Maybe this will break the limitation on internationally imported films, so we can have films from all over the world to fulfil the people's need."
That, of course, is where Hollywood steps in. When The Heroes of Nanking opens in the US, it will likely be accompanied by the rustle of both popcorn boxes and Hollywood screenwriters riffling through Chinese history books, on the hunt for suitable western characters. It can't be long before Reese Witherspoon is trading Mandarin quips with Tony Leung in her latest romantic comedy and James Cameron is directing Chow Yun Fat in a sci-fi blockbuster. When that happens, we'll know exactly which cuddly panda was responsible.