Has the Long-Term Sinking Finally Sobered the Chinese Art Market Up?

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China’s top 2 auction magnates, the Guardian and Poly, have rung down the curtain on their Beijing spring sales 2019 this month. In the arts & antiques sector, turnover in sum of the two companies came in at 4.5 billion yuan ($654 million), which was 6% lower than autumn 2018. Meanwhile, the art industry is still gearing up for the remaining sales of other auction houses, which are due to end in the middle of July.


A Qing Dynasty Imperial Spherical Vase which sold for 147.2 million yuan ($21.4 million) marked a highlight in the antique sector. The Ink wash painting, Lion Forest Garden (1988), by Wu Guanzhong went for 143.6 million yuan ($20.9 million). So far, Liu Xiaodong’s 46 million yuan ($6.69m) - worth oil painting, Computer Leader (1996), ranks first in the contemporary art sector.


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Poly Auction Spring 2019


Nevertheless, the whopping price of a few top dogs lots can’t sweep the frowns away from the faces of art sellers and buyers. Few dare to dream big now. After all, existing results released from the spring sales in mainland China aren’t all positive.


Since the peak of the Chinese art market in 2011, art auction sales in China have adjusted downwards sharply, roughly 50% below the peak. It has become almost an industry consensus that over the next decade, Chinese art market participants aren’t expected to resume their bonanza that existed during the skyrocketing days.


Many have blamed speculators’ capitals for causing a long-lasting bubble crisis in the art market. According to the TEFAF 2019 Report by Professor Wu Kejia, now the market has now filtered out a huge number of speculators who borrowed cash for art trading. The withdrawn money isn’t coming back soon, since both these investors and their supporting financial organizations are more prudent in their business affairs than ever.


Uncertainty in the art industry is heightened by the continuous slowdown of the countries’ GDP growth in recent years. Gloominess shrouds not only the art sector, but also other industries in China - a result of both domestic policies and a hostile global economic environment.


On the one hand, the Chinese government stresses that the slowdown is an inevitable side-effect of an intended economic restructuring. “The restructuring process will continue to last for at least another 15-20 years,” said Deng Yusong, vice president of the State Council Development Studies Center Economics Department. On the other hand, since the beginning of the Trade War, US President Donald Trump and his administration haves announced several times their insisted plan to levy higher import dutiesy on Chinese commodities. Moreover, after Trump’s failed attempt last summer, arts and antiques were once again included in the newly proposed 25% duty tariff list.


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The low confidence of “art art market participants ’ low confidence also comes from the deficiency of art secure-d loaning services and art insurance services in mainland China,” said the president of China Art Economics Research Institute, Professor Xi Mu, at the 2018 Asia Art and Finance Forum. The art world has endeavored to involve banks, insurance companies, and wealth management firms in art-related businesses as much as possible. Art Lujiazui Forum in Shanghai is another attempt among many to build a bridge between the different sectors in order to inspire conversation. Last edition of the forum indicated that building a solid art appraisal as well as an identification and evaluation system are preconditions to the launch of the art finance products the Chinese art world has been waiting for. This will be no easy task in the near future either.


The importance of professional art knowledge has been ignored by many before and during the bubble era - another major barrier facing dealers. Wang Yifei, Executive Director of Gallery Week Beijing said, “The severest problem facing the Chinese art scene is the lack of an interactive relationship between artists, collectors, and galleries.” In the old days, investors splashed their borrowed money on auctions as if they were buying stocks in a never ending bull market. This is somewhat paradoxical because real collectors play vital roles in discovering and interpreting the value of artworks - they are key to contemporary artists’ future market performances. Therefore, for an ambitious contemporary artist, sudden fame caused by an astonishing auction result is nothing compared to a collector who truly understands and supports his art. A collector who inspires his creation in the long term is even better.


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Art Chengdu 2019


Amidst the bleak forecast, a bright spot has appeared in the primary market. - While auction hypes are cooling down, fairs seem to be warming up a little. Gallery owners and fair organizers have left nothing untried in terms of development, or more specifically, “in professionally training" their clients. It is important to notice that JingArt and Gallery Week Beijing haves witnessed a 12% annual increase in total in the number of public educational programs. More efforts have been put into gallery exhibition guided tours as well. The sales at Art Basel Hong Kong have been reported are remaining steady, while the second edition of Art Chengdu 2019 has started to catch attention internationally.


Overall, we can say that art participants in China are turning increasingly clear-headed and cautious after the nausea caused by the secondary market roller coaster. However, for real doers, no challenges areeasy to conquer at this stage.


While the domestic media heatedly discussed the million-worth top lots, Art Chengdu organizers were only celebrating the fact that their 2-year-old fair has finally moved from tents in the street to bricks-and-mortar. They are now humbly looking forward to a brighter future for their local art scene. Deep down these people know, Rome wasn't built in one day, nor is any rocketing market.