China’s broken art market

By Felix Salmon
October 28, 2013
new league table showing that 8 of the top 20 top-selling artists born since 1980 are Chinese (compared to just four who are American), the NYT unveils its latest huge multimedia project: a deep investigation of the Chinese art market.

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When 2011 came to an end, the dominance of Chinese artists in the international league tables was clear, if puzzling. Three of the top five artists, in terms of sales, and both of the top two, were Chinese; Zhang Daqian alone managed to gross more than half a billion dollars at auction that year, the first time any artist had come anywhere near that level.

But no one knew what was really going on. One theory — which the peddlers of art-auction data implicitly supported — was that what you saw was simply the facts of the new art world, and that Chinese artists were suddenly on fire. Another theory was that the auction results were real, but that the relative standings of Chinese and western artists were skewed by the fact that Chinese works were more likely to come up for auction, while western works are more likely to change hands privately. And then there were lots of theories about how the numbers couldn’t be taken at face value at all: one oft-cited article from June 2011 talked about the way in which fine art is used in China as a means of “elegant bribery”.

Now, as Bloomberg comes out with a new league table showing that 8 of the top 20 top-selling artists born since 1980 are Chinese (compared to just four who are American), the NYT unveils its latest huge multimedia project: a deep investigation of the Chinese art market, complete with the revelation that the $65.4 million sale of “Eagle Standing on a Pine Tree” a 1946 ink painting by Qi Baishi, never in fact happened. That was the public auction price, but then the buyer never paid — a very common occurrence, it seems, in China.

So, what’s the truth about the Chinese art market, and has the NYT captured it? For one thing, a good third of the public auction-result data should be simply ignored, on the grounds that the pieces in question never actually sold. This includes, ironically enough, the clever interactive chart in the NYT article itself, showing the best-selling artists in the world from 2006 through 2012. Beautifully tractable databases are like that: even when you know they’re deeply flawed, you still end up using them anyway, because they’re the best thing you’ve got.

What’s more, the velocity of Chinese art is vastly higher than the velocity of western art, where paintings very rarely get resold within a few years of being bought. In China, by contrast, a single painting by Qi Baishi has sold four times at auction in the last 10 years, at prices ranging from $30,000 to $794,000.

The result is twofold: firstly, per-artist totals get artificially boosted by the rate at which works are resold. And secondly, the art market becomes a genuinely speculative bubble (unlike its western counterpart), where people buy just because they think they’ll be able to flip their property for a big profit.

Yes, “elegant bribery” happens as well — where a businessman will gift a work of art to some party official, the official will put it up for auction, and then the businessman will buy it at a very high price, after making sure an underbidder is in place to bid up the final amount. But also, in a country with a savings rate of more than 50%, there’s insatiable demand for just about anything which can be considered an investment:

“A majority of Chinese people do not trust the Chinese stock market,” said Melanie Ouyang Lum, a consultant on Chinese art. “The housing boom has slowed tremendously. A lot of people are looking to art for investment.”

But the main phenomenon behind the NYT story, it seems to me, is a weird and uncomfortable marriage between eastern and western conceptions of where value lies in the art market. The western art market emphasizes originality and authenticity, with the result that everybody wants to buy a relatively small number of important works and important artists. If a work is a fake, then it’s worthless, no matter how beautiful it might be.

In China, by contrast, there’s much less of a premium paid on originality, and many masters came up through the ranks by copying the works of their predecessors. That Qi Baishi painting, for instance, dates only to 1946, but could have been painted at any time in the past few hundred years: its style is timeless. On top of that, art is a manufactured commodity in China, where workshops with hundreds of employees churn out copies of the work of the masters. This makes perfect sense, if what you’re doing is creating something aesthetic to go on the wall. The problems start to arise when the art objects rise in value, according to whether or not someone believes them to be authentic.

My favorite story in the NYT article concerns another master, Zhang Daqian, who visited the University of Michigan Museum of Art in 1967 to view an exhibition of the works of Shitao, a 17th-century painter.

His tour guides were proud to show him the works of such a famous painter, who had died more than two centuries earlier. So they were surprised when Mr. Zhang began to laugh and point to various works on the wall, saying: “I did that! And that.”

“That is how Zhang Daqian talked,” said Marshall Wu, a retired professor at the University of Michigan who first met Mr. Zhang in the 1960s. “You never really knew if he was serious or kidding. But he did a lot of Shitao forgeries.”

Don’t think of the “forgeries” here as being a sophisticated con job: Zhang considered it his job to copy Shitao, and seeing his works hung up in a museum as being Shitao’s simply delighted him. If his painting was as good as the master’s, then it was as valuable as the master’s. And of course Zhang’s “forgeries” are far from worthless: in fact, as original Zhang paintings, they might now be worth more than a Shitao.

But in the auction world, no one pays $65 million for a beautiful object: it also needs to be authentic. Hence the predicament in which the Chinese auction market finds itself. Frankly, I would rather see a world where paintings were judged on their inherent aesthetic qualities, and the identity of the painter didn’t matter. After all, even genuine works of the masters are often painted in whole or in part by their assistants. But the present situation in China is clearly the worst of both possible worlds, both incentivizing and demonizing the copying which has been the heart of Chinese art for centuries. One thing is clear: it’s not sustainable, over the long term. Which means that if you’re speculating in Chinese art, you’d better have your exit planned out. Because the bubble is certain to burst, and it could happen at any time.

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