State of the art
China’s art market is in a state. Collectors descending on Hong Kong for the city’s annual Art Basel fair will encounter a very different situation from 2011, when the Middle Kingdom briefly became the world’s largest art market. An economic slowdown, corruption crackdown, and oversupply are all partly to blame.
China’s slowing economy and stumbling stock markets delivered a double disappointment. Would-be buyers have less cash to splash; and while some investors might consider art as an alternative investment in hard times, this is not a popular strategy in the People’s Republic. Sales of art in China fell by 23 percent in 2015, while the rest of the global market was roughly flat, according to the annual TEFAF Art Market Report.
Worse still, these figures include sales where buyers subsequently failed to pay up. More than a third of lots sold for over 10 million yuan ($1.5 million) last year weren’t paid for, and around a quarter were only partly paid for, according to the Chinese Auctioneers Association.
At the same time, China’s corruption investigators have zeroed in on sketchy art trades. In the past officials used to flog their own calligraphy to business contacts at inflated prices. State media called the country’s calligraphy associations “a hotbed of corruption” and President Xi Jinping banned bureaucrats from holding leadership positions at local art clubs. Though it’s impossible to quantify the impact, the campaign likely subdued trade and valuations in traditional crafts, which account for almost half of China’s total art sales.
It’s not just crummy calligraphy, though: vast quantities of new artworks are threatening to overwhelm the market. Over the past decade prolific local artists have flooded fairs, galleries and auction houses with their masterpieces. This week’s Art Basel show will feature more mainland exhibitors than a year ago. The creative streak is finally slowing – in 2015 there was a 30 percent drop in works coming to auction – but even so, supply still outstrips demand.
This triple setback won’t be fatal. Though the days of China’s double-digit growth are over, the burgeoning ranks of the super-rich will likely buoy demand. Still, it will take time to rebuild collectors’ confidence. Any recovery will be slow.