Releasing A Film In China Is Very Complicated
In order to be released in China, movies need to obey their numerous arbitrary and loosely-defined rules which stifle creativity and homogenize the finished product. Among China's rules are decrees that a film cannot found to be "propagating cults and superstition," nor can it "Jeopardize social ethics or national cultural traditions." Other less-than-tangible regulations mean that films are often edited, not just for violence and sexuality, but for vaguely-understood "immoral content."
There are no traditional film ratings in China (R, PG, etc), so every film must meet national standards of decency, and that includes rules that clamp down on creative expression; for example, all villains must face some form of comeuppance, to be punished for their misdeeds.
In a 2016 interview with The Guardian, Hong Kong filmmaker Johnnie To stated, “To make it really big, a film has to be one the Chinese censors can approve. The range of films that the world will get to see will be restricted.” The world should not be subjected to the restrictions of the Chinese, but To predicts that such a future may come to pass if Hollywood continues to court China the way they did with stunts like the "Chinese Cut" of Iron Man 3 and their refusal to stand up to the country's censorship practices.
Why do Hollywood studios put up with China's stranglehold on creative freedom? It's not because of the current state of China's box office, but because of what the film industry is betting China's box office will be in the future. There are nearly 1.4 billion people living in China; that's a lot of potential customers, and Hollywood believes that the Chinese box office is a worthwhile long-term investment, no matter the cost.
We Have Proof Blockbusters Don't Need China
As mentioned earlier, China doesn't usually turn a flop into a hit; at best, the Chinese box office can be damage control, turning an outright bomb into merely a poor or middling performer. That being said, the inverse is also true: a movie doesn't need China to be a hit. As of this writing, Star Wars: The Last Jedi is at $1.27 billion and rising.
In recent years, there have been several blockbusters which dared to just throw their hands in the air and say "Screw it. We don't need China." While Logan got a (heavily edited) release in early 2017, Fox's R-rated superhero parody, Deadpool, did not. The legend goes that Fox tried to put together a PG-13 version of the film for international release, and a short-lived petition for a more family-friendly cut of the film briefly made social media headlines, but no such cut was ever made available, and the film was simply denied release in China.
Deadpool was a film which stuck to its guns and refused to capitulate to China's demands, and instead marched to the beat of its own drum – however crude, juvenile, and gloriously obscene that drum may have been – and it marched all the way to the bank, bringing in an unexpectedly huge $783 million worldwide, no China required.
Another recent superhero blockbuster that didn't get a fair shake in China was Suicide Squad. Despite its more inclusive PG-13 rating and an offer to change the title of the film to the less provocative Special Task Force X, China wouldn't allow the film to play in their theaters, likely objecting to the premise of using morally corrupt villains as the protagonists. Despite this, the film still went on to gross $746 million worldwide, more than enough for the $175 million production to be considered a sound financial success.