Chinese art may face bubble trouble as prices soar

By Simon Rabinovitch

BEIJING (Reuters) - When Chinese artist Yue Minjun sold his painting "Gweong Gweong", inspired by the bloody Tiananmen Square crackdown in 1989, he received $5,000.

That was in 1994. Fourteen years later, the painting of toothy men dropping like missiles from war planes over Tiananmen, fetched $6.9 million at an auction last month.

Feverish bidding at Christie's spring sale in Hong Kong did not stop with the human missiles. Wild applause erupted when Zeng Fanzhi's painting of youths wearing absurd masks and Red Guard scarves went for $9.7 million, a new auction high for any Asian contemporary artwork.

Collectors and critics reacted with amazement but little surprise. Prices for Chinese contemporary art have soared over the last five years, making artists rich and investors even richer.

But the boom is now sowing doubts in a country where the stock market, which once seemed a guaranteed fount of money, has shed half its value from last year's peak.

Could the Chinese art market be near the edge of such a precipice?

"The market definitely has a bubble for certain artists. And those bubbles will burst," said Zhang Xiaoming, head of Chinese contemporary art for auctioneer Sotheby's.

"But I don't think the market is going to go down substantially. It's just becoming smarter. It's not everything goes," she said.