BEIJING // At his studio in Beijing's Yi Hao Di art community, Mok Wai Hong is trying to paint while bundled up in a down jacket. Outside, it is a bright, early spring day, but the 32-year-old Hong Kong-born artist is shivering. In China these days, if gallery owners and artists are experiencing a cooling art market, Mr Mok is feeling the chill perhaps more literally than others. "Because of the economic crisis, this district doesn't have the money to supply heat," he said. "I was painting here in winter in two degrees [Celsius]."
Across town, the just-built Jinzhan International Art District sits like a ghost town, its courtyard overgrown with unkempt grass. A large poster for a show hangs on a gallery wall - one of the first and last organised there before the current financial fallout forced a sharp contraction in the Chinese art market, once one of the fastest growing in the world. Between 2003 and 2007, prices for Chinese contemporary art had risen by 325 per cent while total sales at Sotheby's, the auctioneer, rose from US$3 million (Dh11m) in 2004 to $51m by the spring of 2008.
Huang Yan, a Chinese artist whose works have earned him $100,000 a piece at auction in the US, poured eight million yuan (Dh4.3m) into building the art district last year, hoping to make about 1.5m yuan annually. But there are only three tenants in a space that could hold 40. "It was quite unexpected," he said of the economic downturn, which has left Chinese artists earning just a fraction of what they were before.
In China's biggest city, Shanghai, galleries are also feeling the pinch. Cheng Xixing of Don Gallery said she has not moved a piece in three months. International collectors, who previously made up the bulk of buyers of Chinese art, have turned shy, fearing a collapse of the market. At her grand opening at the end of 2007, Ms Cheng sold almost all of the eight pieces on show at prices of between 7,000 and 30,000 yuan to Chinese and foreign collectors. A year later, her second show for the same artist was a different story. "This time, almost everyone appreciated his work, but no one buys. It's really very difficult."
Galleries around the world are going through hard times, from New York to Chelsea. Art is considered a luxury good, but also an investment, and in tough economic times collectors and speculators often become more cautious. "I think it's more of a confidence issue than a money issue," said Sun Ning, the director of Platform China gallery. "All these collectors not buying art anymore is not because they suddenly don't have money. And the galleries closing is not because they suddenly don't have money. It's because they lost confidence in the market."
As communist China continued to open up, signing up to the World Trade Organisation and hosting last year's Olympics, contemporary painters captured the interest of collectors and galleries. With sales rocketing, Beijing's first art district, 798, opened, a 1950s military factory reincarnated into a grassroots artist community, with boutiques, cafes and bookstores alongside galleries and studios.
By 2007 and 2008 the market was at its peak and the rock stars of the Chinese contemporary art scene, painters like Zhang Xiaogang and Yue Minjun saw their pieces sell at auction for upwards of $6m. Several foreign galleries opened spaces in 798 and the Chinese government invested 100m yuan in developing the district. Art fairs were organised in Shanghai and Hong Kong, bringing more international collectors and gallery owners to China.
An Art Market Trends 2007 report by Artprice heralded China as the third largest auction market, surpassing France to follow the US and Britain. The rapid development of the market "globalised Chinese art", said Philip Dodd, the chairman of Made in China, an arts consultancy firm. "You can no longer read the story of art without reading China into it." But while the insatiable demand has put Chinese artists on the map, it also created a somewhat distorted vision of what good Chinese art is, Mr Dodd and other critics have said. Certain themes or icons, such as the former Chinese leader Mao Zedong, or pop propaganda, were frequently repeated, in an attempt to play into what was selling well or what artists thought collectors wanted.
"Young artists painted for the market in the end. [They thought] there's a formula ? It was painting by numbers," said Andrew James of Andrew James Gallery in Shanghai. In May 2008, Christie's recorded its highest sale of Chinese contemporary art, selling a Zeng Fanzhi piece for $9.7m. But Mok Wai Hong, the Hong Kong artist, said he was already starting to hear rumours of a dip in sales at international art fairs. In the lead up to the 2008 Olympics, "we didn't take it seriously", he said.
The contraction means that galleries are holding fewer or longer exhibitions. Some, though, have had to close because of rent increases. Auction sales are affected too. Sotheby's autumn sales for 2008 for Chinese contemporary art dropped to $40m. Some see this as an opportunity to redefine the market. "The strong work, the good works from China will actually survive," Mr Dodd said. "I think what is happening is a shakeout of second-rate work that was bought either for investment or out of curiosity, and I'm not displeased that those collectors are getting their fingers burned."
What is happening now is not a cool-down, Mr Dodd said. "It's a pause for breath." * The National