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POLITICAL ECONOMY
Fires dim on Chinese art market
by Staff Writers
New York (AFP) Sept 7, 2012


China seeks economic boost from infrastructure
Shanghai (AFP) Sept 7, 2012 - China has approved a massive infrastructure package worth more than 1.0 trillion yuan ($158 billion), state media said Friday, as the government seeks to boost the flagging economy.

The top economic planner, the National Development and Reform Commission, this week announced approval of 55 infrastructure projects ranging from subway lines to highways, reports said.

The China Securities Journal said the 1.0 trillion yuan figure was a "conservative estimate" for spending on projects announced Wednesday and Thursday.

The government needed to open more funding channels for infrastructure, including allowing banks to relax controls on credit for projects, the newspaper quoted unnamed industry sources as saying.

The official Xinhua news agency described the package of projects as a "stimulus plan" though the government did not use that term when announcing the approvals.

On Wednesday, the commission announced it had approved 25 new urban railway projects, in what analysts said was a sign the government is ramping up government spending to boost the country's weak economy.

It said the projects, including subways and light railways in 18 cities across China, were valued at more than 800 billion yuan.

The commission on Thursday also unveiled another 30 infrastructure works -- including 13 highway projects, 10 waste treatment projects and seven port or waterway projects -- but gave no value.

The news sparked a rally on China's stock market on Friday with the benchmark Shanghai Composite Index closing up 3.70 percent on gains in building material and construction shares.

Analysts said the government spending could boost the country's economic growth from the fourth quarter of this year.

"Implementation of these projects will begin in the coming months, which will cause fixed asset investment growth to rise," Zhang Zhiwei, chief China economist for Nomura, said in a research note on Friday.

"The impact should start to be reflected in GDP (gross domestic product) numbers in Q4 2012."

He estimated future spending on recently approved infrastructure projects at 1.0 trillion yuan, equivalent to just over two percent of 2011 GDP, and added it would be invested over five years.

But China has so far refrained from equalling the massive 4.0 trillion yuan fiscal stimulus package it launched in the wake of the global financial crisis in 2008.

China's economy has eased markedly over the past year, expanding 7.6 percent in the second quarter of 2012, the worst performance in three years.

The government has set a target for economic growth of 7.5 percent for this year, down from actual growth of 9.3 percent last year.

Securities house UBS on Friday cut its China growth forecast for 2012 to 7.5 percent, from the previous 8.0 percent, citing delayed government support.

"In recent months, economic activity has remained weak as export growth slowed. Policy support was not as rapid or aggressive as previously envisaged," economist Wang Tao said in a report.

A year ago, China was the sensation of the international art market, but as New York auction houses prepare next week's autumn sales of Asian works, the Chinese dragon has clearly lost some fire.

"It's no longer break-neck," Henry Howard-Sneyd, vice chairman for Asian art at Sotheby's, told AFP.

"The economy in China is not the crazy growth it was. There's also a hiatus as we wait for the change in power structures. As always, everyone holds their breath."

That China's upcoming Communist Party leadership transition should be part of the reason for dips in the art business is just one indication of complex nuances in the huge sector.

Last year, the Chinese art auction market was said to become the world's biggest, while the two highest grossing artists were also Chinese: Zhang Daqian and Qi Baishi, with nearly a billion dollars in sales between them.

Figures are sharply down at the major auctions this year, but Howard-Sneyd saw a correction rather than a retreat.

"We see the market as very solid," he said, with Sotheby's offering 649 lots with a low estimate of $25,980,200 and a high of $38,856,200.

Highlighting the classical Chinese sale September 13 will be a more than 10-meters-long scroll by Lan Ying, who lived between 1585 and 1664. The intricate landscape is estimated at $1.2-$2.2 million.

A series of Indian contemporary paintings never before at auction, such as M.F. Husain's seminal "Untitled (The Three Muses, Maya Series)", estimated at $500,000-700,000, will be on offer September 10, as will ancient Chinese ceramics and jades on September 11-12.

At rival auctioneer Christie's, Asian art chief Hugo Weihe echoed the mood at Sotheby's.

"There's a perception the market has peaked in China," he said, noting that the slowdown is being accompanied by increasing sophistication.

"There's more and more focus on the best material. They're not happy with mediocrity. The market has matured."

Christie's hopes to raise about $25 million in its Asia sales throughout the week.

Highlights include the large-scale "Untitled (Falling Figure)" by India's Tyeb Mehta, estimated at $600,000-800,000 on September 12, and a green jade Chinese pot from the 18th century, carved with an intricate garden scene, estimated at $500,000-800,000 in the September 13-14 Chinese sale.

Although experts have little doubt that Asia, China in particular, remains the most fertile ground for the industry, they say the challenges are many.

On top of economic and political uncertainty, there's mistrust about the financial numbers from reported sales within China and the no less slippery problem of authenticating the works themselves.

This is especially difficult with pricey classical works because Chinese artists traditionally learned their skills by copying previous masters.

"Chinese are consummate copiers and fakers," Howard-Sneyd said.

Another issue plaguing the authenticity is the turmoil of modern Chinese history, meaning "there's no continuum of ownership," he added.

Christie's has an unusual lot aimed exactly at the collector with those worries: a reference library of rare books and catalogs put together by C.T. Loo, a key figure in the international trade of Chinese art in the first half of the 20th century.

With books estimated at between $500 and $15,000, this is an unusual chance for increasingly savvy Chinese collectors to get in a position to do some of their own authenticating.

"The reason we're seeing a big demand for something like this reference library is that new Chinese collectors haven't had access to the kind of references we've had over here for the last 100 years or so," said Noah Kupferman, co-head of the Chinese department in New York.

"Now they do. It's indicative of a trend in Chinese art."

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