What’s going on in the Chinese art market?

opinion hl

Something is wrong in the Chinese art market. A few commentators predict complete meltdown. Others point to continued high prices. And most people are scratching their heads and wondering about the unpredictability manifest in the auction market.

Lack of information about the strength or otherwise of private and gallery sales means that most observers are driven to looking at auction records. These are, at best, unreliable when attempting to gauge what is actually going on. The number of lots unsold at some auctions recently was disappointing: more than 50% at Lyon & Turnbull’s recent June sale; 41% unsold at Bonhams, Kinghtsbridge; 40% without a home at Sotheby’s New Bond Street ‘Important Chinese Art’. At the same time, the actual totals in money terms of many of the recent sales exceed those achieved year on year. What is notable is that the very best lots are attracting more money than ever before.

There are a few factors which have sought to undermine the lower and middle market this year. The most significant one is to be found back in China itself. All the Chinese dealers we know in places like Beijing and Shanghai, where wealth is most evident, are complaining about the partial, if not total, disappearance of their important customers. This represents a tangible manifestation of the effect of the anti-corruption and tax evasion drive energetically launched by President XI Jinping. It used to be that Chinese officials in their millions gratefully received gifts in return for little favours: speeding up a planning application, dumping some parking tickets or, even, allowing indiscriminate commercial development in their own little area of local political influence.

All those Ming bowls and vases, glistening jades and elegant jewels are no longer being bought for gifts. This has effected large areas of the middle and lower market. Here in the UK, the auctioneers themselves are running scared. As the Antiques Trade Gazette put it this week in its current issue, ‘the Chinese market is awash with fakes’. We think that is overstating the case somewhat but there can be little doubt that there is a large quantity of very well produced fakes being offered to auction houses and, in turn, being offered to their customers. The problem very much is that the auctioneers can no longer tell between the originals and the fakes: the fakes are that good. There is, however, an upside to this. Some very fine pieces, under-catalogued or catalogued with caveats like ‘probably later’ or ‘a later copy’, are slipping through at auction at a fraction of their real price. Of course, they are bought without that vital ingredient: provenance.

Provenance implies that you can prove a piece came from a great house in the country, can be shown to have been looted from the Summer Palace or was sold to your Uncle Bill by a starving local as he came back from the Japanese War. You need a bloody good story these days to place a piece with most auction houses. In the absence of being able to dream up a wealthy (preferably titled) gin-sodden granny who spent her life in a hammock somewhere out East, you are stuffed.

Eventually, this provenance thing will go away. For a start, there are very, very few things left with real provenance. The great houses of England were emptied long ago by death duties and the lack of heirs after two World Wars. Most of the great collections built up in the early part of the 20th century have been dispersed. Provenance is being demanded because there is insecurity operating. At the moment there is something of a lacuna in expertise. Just as Britain and the US lacked analysts and linguists in the wake of 9/11, there aren’t that many experts on Chinese art left alive in the UK.

So we will have to go back to assessing an object using the old values: on the basis of its craftsmanship, aesthetic appeal and, the old failsafe, gut reaction. Meantime, the market might be in recession right at the moment but, remember, there are around one and a half billion Chinese out there and the middle class is growing at a simply formidable rate. Most of them are going to want a little chunk of their own past. If it looks the part, it will find a home.

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