China's Blistering Art Market Growth Unlikely To Persist - Citigroup Study

Tom Burroughes

16 November 2015

China has achieved a “blistering” rate of growth in its art market over the past decade and a half and its global share has also surged but it is unlikely this will continue, according to a report on global trends by not bad considering that the period was punctuated by the deepest global recession in almost a century. By way of context, in the same timeframe global GDP and exports grew at 3.5 and 8.1 per cent per year, respectively. The art market clearly outperformed, even during a time of solid average growth in economic activity and substantial advances in globalisation,” the report said.

Looking ahead, the bank does not see continued rapid growth in China’s art market.

“The Chinese market, having essentially caught up with the US and UK, will not be a one-way bet through 2030. Moreover, the risk of either a disorderly slowing – or unwinding – of the blistering market expansion in the 2000s or of a broader credit bubble popping suggests a cautious approach to Chinese art,” it said.

“The US and UK markets, in turn, have been boosted by a steady stream of record auction results, driven in part by widening global inequality. While it is difficult to predict when this trend will end, it is worth noting that the US and UK will be far more exposed to the fallout than other mature markets such as France and Germany,” it said.

Auction dominance
The Citigroup report also said that auctions are a particularly dominant part of the China art market infrastructure.

“It is estimated that up to 70 per cent of the art market in China can be attributed to public auctions — a stark contrast to other, more established markets, where the primary sector is responsible for the majority of sales. This inverse relationship is grounded in the relative weakness of Chinese galleries. While several of them, such as Pace Beijing, ShanghART and Long March Space, are highly regarded and rank among the best in the world, the vast majority simply lack the experience and resources to steer the development of an artist’s career — a task that has, by default, fallen to a few powerful auction houses with more clout and function,” it said.