Chinese Antiques Market Staggers As China’s Economy Slowing down

A number of auction records have been set in the latest autumn season with several works of art selling for more than HK$100m. However, do these record-setting prices truly reflect the art market?


When you break down the whole picture into smaller parts, the positive result that we see is mainly driven by the Contemporary and Modern Art segment, which pulled off a remarkable performance this September. On the other hand, in the Chinese antiques market, which heavily relies on buyers from mainland China, the performance of various Chinese works of art sales across different auction houses was lacklustre. A number of top-notch items ended up being bought-in or sold for prices below expectation. Is it a signal indicating the gloomy prospect for the Chinese antiques market? What could be the reasons for the recent weak performance in the market?

Lukewarm reception at Chinese works of art sale

Zao Wou-ki’s Juin-Octobre 1985

The centrepiece of this autumn sales is undoubtedly Zao Wou-ki’s Juin-Octobre 1985, which was sold for a record-shattering HK$510m (US$65m) at Sotheby’s Hong Kong. In 20 auctions held in five days, Sotheby’s autumn 2018 Hong Kong sales realised a total of HK$3.64 billion, a flat to those last April. If we take out the whopping amount contributed by Zao Wou-ki’s Juin-Octobre 1985, the sale total is, in other words, HK$510m less than the number from the 2018 spring sales, suggesting a decrease in the sale total from other art categories in spite of the growth in Modern and Contemporary Art sales.


Chinese works of art sales failed to keep up the momentum from Modern and Contemporary Art sales. The overall sale total of this category fell short of expectation. Even though some star lots were sold for more than HK$100m, the hammer prices and the final prices were still below estimates. For instance, Sotheby’s Chinese works of art sale series was expected to fetch in the range of HK$1 billion (US$128m). The series finished with a total of HK$860m after premium, far below the sum of presale estimate of HK$1 billion (excluding buyer’s premiums).

Qianlong Falangcai Poppy Bowl was sold for HK$169m

Edward Wilkinson, Executive Director of Bonhams Asia

The same problem is also faced by other auction houses this season. Quite a number of leading lots offered by various auction houses failed to sell. Some auction houses only reached half the amount it sold a year ago. It has been observed that buyers from mainland China are more cautious at auctions. Edward Wilkinson, Executive Director of Bonhams Asia, said: ‘nervous sentiment across our market that was experienced by all.’


The Chinese art and antiques market largely depends on Chinese buyers. What’s the reason that holds buyers back from spending a generous amount on artworks like they did over the past few years? It can be attributed to several reasons: China’s economic slowdown, the China-US trade war and tight cash flows inside China.

As the China-US trade war escalated, China stocks tumble to multi-year lows. China’s benchmark equity gauge recorded the biggest loss since February 2016 as a global sell-off spread. The Shanghai Composite has lost 24 per cent in the past 12 months.


Concern rises as growing signs suggest China may tolerate yuan weakening past 7 per dollar, a key psychological level that yuan hasn’t breached in a decade. There are fears that Chinese officials might weaken yuan as a weapon to fight against the trade war. The central parity rate of the yuan against the US dollar has continued to fall, down to 6.9072 on Thursday, marking its lowest level in 19 months.

The impact of US-China trade war and weakening yuan rippled through other areas. The peer-to-peer (P2P) lending platforms in China are collapsing at a rapid pace. A P2P platform is a practice of lending money to individuals or businesses through online services that match lenders with borrowers. There has been a surge in China’s P2P platforms since 2007 thanks to the lack of regulation. Problems like high interest rates, misuses of funds and exaggerated return figures long exist in the industry. However, the industry now comes under intense pressure amid tightened regulations introduced by the authorities.


According to the figures reported by Chinese web portal for online P2P lenders, as of the end of August 2018, there are 6,406 P2P lending platforms in China, among which 4,811 have closed or run into other problems. Chinese media also reported that the estimated amount of outstanding funds is up to one trillion yuan (US$144.5 billion). It is expected that more P2P platforms will shut down their businesses as the government continues to carry out strict regulations, causing panic among investors and borrowers.

China authorities have also started to crack down on shadow banking activities, leading to cash crunches in many private businesses which have been relying on the shadow banking industry since China’s state banking system largely exists to serve local governments and state-owned enterprises. Those private businesses without credit to roll over debt have rushed to pledge their stock shares as collateral for loans.


As a result of the uncertain outlook for China’s economy, together with tight cash-flows in the country, Chinese collectors and buyers are taking a prudent approach this auction season, whether they are buying Chinese art and antiques for collecting or as an investment.

Qianlong reticulated vase was sold for HK$149m (US$19m)

It’s less than two months before the November autumn sales take place in Hong Kong. Will there be a light to the antiques market amid the gloom? We will have to wait and see how the November sales perform.


Every cloud has a silver lining. To look at the good side of the downturn of Chinese art and antiques market, it is the perfect time for collectors and investors to start bargain hunting and to buy high quality works at low prices. Unlike stocks and shares, Chinese art is an option of relatively lower risk. It stores values as a short-term investment and increases in value in the long term. Hence, the Chinese art market is less volatile in comparison. For example, experts believe the Qianlong reticulated vase that was sold for HK$149m (US$19m) is likely to fetch a higher price when the market booms.

Apart from the above economic factors, there is another unfavourable factor affecting the Chinese art market – hearsay. In recent years, there is a strange phenomenon in the antiques world where groundless accusations and market hearsay go around. Some reckless members in the industry try to scare off competitors and to lower the prices of their desired pieces by using despicable means, such as circulating unfounded speculations, casting doubts on the authenticity of genuine masterpieces.


By placing individual interests over the growth of the Chinese art and antiques market, spearheaders of those malicious rumours are actually putting the sustainability of the market at risk. These bad practices seriously undermine collectors and investors’ confidence in the market. Of course, a healthy market welcomes different voices. However, unreasonable arguments and destructive conjectures are the last things that we should see in the market.