The reasons range from the cultural to the political to the financial
Fiercely protective of its culture and values, China only permits 34 American movies per year to screen in the country, and even then the qualifying films are subjected to heavy edits at the discretion of Chinese authorities. This policy may be at odds with the director’s (or even a studio’s) vision, but with a potential audience of a billion and a half people, studios are quick to acquiesce to most of the demands.
Here’s Looper’s look at and explanation of some of China’s most infamous edits:
Some of the changes are cultural (inclusion of different foods or sports); many are sociopolitical (the elimination of homoerotic innuendo or even the refusal to acknowledge a Tibetan character in Doctor Strange); and some seem to be more financially driven than anything.
Censorship in China is such a known quantity these days that screenwriters create early drafts and concepts knowing very well that the alienation of fickle countries such as China could cause a film to stumble out of the gate financially. But given the arbitrary nature of the censors, putting writers in their shoes seems to be a fool's errand.
For instance, in Skyfall, the second Bond film starring Daniel Craig, the censors understandably were miffed by dialogue insinuating their country had a reputation for torture and human rights violations. So those lines were struck from the Chinese iteration of the film. But so too was a fleeting scene in which a Chinese security guard was killed.
When all else fails, Chinese censors resort to a simplistic, but devious fix—they just change the subtitles for Chinese audiences without revising the English words that are uttered on-screen. It’s certainly a cost-effective way of controlling the message, but at some point, Chinese audiences might want to read what the characters are actually saying, rather than what a state-run agency wants them to be saying.
The most notorious and ham-fisted edits took place in Iron Man 3, which saw scenes revised and added for the Chinese market that were way off the mark tonally and from a production value standpoint, and featured some crass placement of a Chinese beverage in the early scene.
It’s come to the point now that China’s purchasing power is such that studios are becoming far more proactive in crafting a product that won’t just be allowed in China, but loved. After a tepid response to The Force Awakens, Disney took pains to cast notable Chinese actors in Rogue One to give audiences a reason to turn out.
Thus far, the relationship between Hollywood and China has been tenuous, but as the market becomes more important and audiences demand authenticity from their films, the studios and the culture are quickly scrambling to find common ground.