DWA set to ink Chinese joint venture

BEIJING -- China's vice-president and leader-in-waiting Xi Jinping is expected to unveil a joint venture between DreamWorks Animation and two Chinese state media firms during his two-day visit to Los Angeles. The pact will see DWA, China Media Capital and Shanghai Media Group build a studio facility in Shanghai with the aim of developing film, television and live stage productions for the Chinese market, according to a report in the Financial Times. The deal is part of a effort by Xi to cement relations between China, the world's fastest growing movie market, and Hollywood, during his visit. A big fan of Hollywood movies about World War II, Xi is due to take over as supreme leader of China later this year. Against a backdrop of a flurry of Sino-Hollywood link-ups in recent months, Xi meets Jerry Brown and Mayor Antonio Villaraigosa on Thursday and Friday, after an historic U.S. trip, which also included Washington D.C. and Iowa. There isn't much in the way of detail about what they will be talking about, but there have been talks in the run-up between the U.S. and China about changing the quota system, which restricts the number of foreign movies coming into China every year to 20. Xi is unlikely to remove any of these highly politically sensitive limits during this trip. He could also discuss another major impediment to relations. In 2009, the World Trade Organization ruled against Chinese restrictions on the importation and distribution of films, DVDs, music, books and journals, but little has changed since, much to U.S. annoyance. Xi is no stranger to the entertainment biz -- he was put in charge of ensuring the success of the Beijing Olympic Games in 2008 and the general view is that he succeeded with flying colors. Also his wife is one of the most famous warblers in China. Folk singer Peng Liyuan can be seen singing patriotic songs in military uniform on TV galas, and is probably even better known than he is right now. That will all change in October, when he is named General Secretary of the Communist Party, the most powerful position in the land. Currently vice-president, Xi is a more outgoing figure than current leader President Hu Jintao. He is a powerful princeling in the Chinese Communist Party and a canny political operator, and his leadership looks set to try and soften China's image abroad. Taking in a Lakers game during his visit is part of this approach, further evidence of how China is all about "soft power" these days, about spreading the message of its peaceful rise through its burgeoning investments in state media with overseas offices and also in the film biz. Earlier this month, the Beijing government announced that it had set up its first state-backed film fund to enable co-production between China and the U.S. Called China Mainstream Media National Film Capital Hollywood, the fund will have offices in Beijing and Beverly Hills and will be led by former China Film Group prexy Yang Buting. The aim of this fund is to co-finance and co-produce projects that have worldwide box office potential. A flurry of film funds have launched of late eager to tap into China's booming market. B.O. gross swept past $2 billion for the first time last year, and the biz has grown by more than 25% every year since 2003. Culture is a pillar of the Chinese economy -- the Communist Party has designated it as such, and it is looking to the cultural industry, such as the entertainment biz, to help keep the country's 8% growth rates simmering, and to help the country get out of the manufacturing rut that it is currently stuck in. According to data from the National Bureau of Statistics, added value from China's cultural industry rose 25.8% year-on-year to 1.1 trillion yuan ($172 billion) in 2010. This is a strong rise, but it still only accounts for 2.75% of overall gross domestic product, so there is room for improvement here. The Chinese want U.S. expertise to help boost the biz at home, and they also want a way of exporting Chinese movies abroad as a follow-on step. He is no stranger to America either. He has a daughter at Harvard and he spent time Stateside years ago, in Iowa. With a sense of public relations timing that would warm the heart of any Hollywood publicist, Xi went back to see the family he stayed with as a young cadre back in 1985. Then he was a youthful head of an animal feed delegation. Now is the heir apparent to world's rising superpower. Contact the Variety newsroom at news@variety.com