I AM searching for a new art gallery in central Shanghai called Bund 66. Its name stakes a claim to the majestic 19th-century river-fronted Bund which is now home to glamorous shops, bars and restaurants. But its address is 66 Nanjing Road East, around the corner, once Shanghai's most fashionable shopping street but now bland and dismal. Inside a 1930s art deco office building, a fifth-floor door has a small sign saying Bund 66. I push it open to reveal a large white space, a vase of lilies and a pretty girl behind a black desk. I am attracted by a spare, abstract work, a few hieroglyphic marks on a white canvas, and ask the price. It's $3000.
That afternoon, I ask a friend about the artist, Zhou Chang Jiang, and she arranges for the three of us to meet in an empty, freezing cafe. The price is now $300.
We shake hands and the picture is delivered to my hotel that evening. It's another reminder that China has real artistic talents but the markets aren't working. Artists need galleries as much as galleries need artists, and neither side benefits if an artist who has an exhibition sells direct to the public at a 90per cent discount.
Internationally it is reckoned that China has overtaken France as the world's third largest art market after the US and Britain, with a painting by Cai Guo-Qiang fetching $US8.5 million ($8.88 million), a record for a contemporary Chinese work. ArtPrice's list of 100 living artists whose works sell for more than $1million includes 35 Chinese. Five years ago, only Cai made the list.
Cai, who has lived in New York since 1995, was the first Chinese artist to be given a solo exhibition at the Guggenheim earlier this year.
But inside China it's a different matter. The next day I take the picture to my office. I know my colleague, like most Chinese people, doesn't like abstract art. She is steeped in traditional virtues and the madcap fun and intellectual shocks of Western art are a mystery to her. She is unmoved by the art and perplexed by the artists. When, a few days later, we see a pop video of Kylie Minogue cavorting with six butch and well-oiled sadomasochistic men, and I explain that this lovely, winsome woman is a gay icon, she gives up. It is all too difficult. But she knows China is changing.
Shanghai had a veneer of foreign sophistication in the '30s, when Noel Coward sat in the Cathay Hotel writing Private Lives and partying with Douglas Fairbanks and Charlie Chaplin at Victor Sassoon's mixed-sex (in the sense of mixed-up-sex) fancy dress parties. The city was then the world's third largest financial centre, rich and exotic, and London and New York were a long way away. The party ended in 1937 with the Japanese occupation, although its architecture, designs, furniture, clothes and memorabilia of old Shanghai are enjoying a renaissance among hip 30-year-olds.
Coward and his mates would be astonished at the scale of China today. Every year China's universities produce another six million graduates of whom about 75,000 go on to do a masters in the US, Europe or elsewhere.
Members of this new generation do not want to follow their parents into the fields or factories. China's new heroes are capitalists and entrepreneurs. The coveted destinations are office jobs, preferably with a well-known company. And the cocktail of a booming economy and cultural freedom (well, in patches) encourages many to seek a job in the creative industries.
Qiong Zi Flower is a small but funky shop in Shanghai's tree-lined Julu Road, which would not be out of place in Sydney or Tokyo. Owner and designer Qiong Zi sells high-class women's clothing notable for bold designs and startling colours. Her clothes are elegant and sensual, even sexy. They echo the Shanghai women of the '30s, more French chic than New York glamour, but with a dash of the up-to-the minute Milan pizzazz you find in Etro or Roberto Cavalli. A typical dress costs about RMB1400 ($215), one-third its likely price in London or New York.
Australian Sandra Shmith and French Laetitia Charachon came to Shanghai when their husbands moved here and have partnered to set up the Platane outlet for high-class gifts and homewares. Shmith says Shanghai's energy is contagious: "Everyone is doing something." The shop sells Chinese and foreign designs. Generally speaking, the Chinese buy Western stuff, the tourists buy Chinese stuff and the expat workers like to mix and match. She says the Chinese are excellent manufacturers but slow at having ideas. "But how long will that last?" she wonders.
Many foreigners are caught up in China's buzz and many Chinese, keen to succeed, welcome the foreigners' experience of consumer markets and business methods. For an aspiring Chinese, having a Western partnership is a mark of success. Deng Min, an up-and-coming fabric designer, has won a good reputation for her imaginative designs, but says: "I haven't really succeeded until I can sell through a European chain." Like Shmith, she knows the Chinese domestic market will take off but doesn't know when.
Even so, it is hard to be heard and to reach customers.
Marketing and PR are primitive. Reputations can rise and fall without much base in reality. Newspaper coverage favours those who have government connections or pay for it. And old-fashioned communist attitudes lurk. Until a few years ago, students were forbidden to wear jewellery. The Government said it was ostentatious and a waste of money. Modesty was all. Even today, many students feel obliged to give any spare cash to their parents. One of the most vibrant scenes is contemporary art. New movements multiply with bewildering speed, as cities, artists and international dealers promote their favourites. The British Council has logged the Stars Group, Scar Art, the Red Brigade, Nativist Realism, Cynical Realism, Rational Painting, the Stream of Life, the New Generation (1991), and Political Pop through to Youth Cruelty and Visual Comics. This rapid turnover is caused partly by Chinese people's instinct to operate in groups and partly by their mania for labels.
The music scene is less ambitious. Mainstream pop is everywhere and cutesy muzak blasts out in every shopping mall and foyer, indistinguishable from other Asian pop.
But alternative, edgier music is so underground as to be almost invisible. Young people enjoy fashion, clubbing and gaming, but the idea that pop and rock might be an act of youthful rebellion has not taken root. China doesn't really have a youth culture in that sense. The idea of doing something to be different from one's parents is seen as a Western malaise. The Ministry of Culture keeps a watchful eye and has veto rights over lyrics before they can be recorded.
The Government welcomes international glamour, symbolised by Fendi's fashion catwalk on the Great Wall in October 2007, and sees no harm in New Yorkers paying millions for a Gai oil painting. It is relaxed because art and fashion do not reach the mass population.
But it watches the mass media closely, and maintains tight control over television and radio, as well as newspapers and magazines. As a result, many young people don't want to work in these industries. In the long term, China's media business will be gigantic, challenging New York and Los Angeles, as Rupert Murdoch was the first to spot; but it will be the last bastion to fall.
The question facing the Government is how to encourage creativity without disrupting the social harmony that is the country's most admired quality.
Artists, of course, play on this tension. It's what artists do. Some of the best work does so openly, as in Yue Minjun's smiling faces and Liu Xiaodong's New Immigrants at the Three Gorges, which restaurateur Zhang Lan bought for $2.7 million. But sometimes the Government gets nervous. Zhang Huan's solo show at the Shanghai Art Museum was mysteriously cancelled last March because, it was rumoured, the city's authorities disapproved.
Luo Zidan caught the mood in his Two Sides performance in Chengdu, the capital of Sichuan, when he walked the streets with his right side looking like a peasant, from his weather-scarred face to his tattered Mao suit, and his left side like a smart businessman. At a smart hotel, the peasant polished the steps; in the shops, the businessman tried on expensive watches.
The Chinese are always conscious of rank and position. One hesitates to say class, but it's the right word. Everything has its place, and knowing one's place produces the much-loved harmony. But creativity thrives by being different, and art weaves its magic by being shocking and disruptive.
Ai Wei Wei, former bad boy made good, who was closely involved in the design of the Bird's Nest stadium in Beijing, says the Olympics are a fake smile hiding China's deep troubles. He beat film-maker Martin Scorsese to a boycott and says he will not attend the opening ceremony. Instead, this summer Ai is heading a 100-strong team of architects building 100 eco-efficient houses in 100 days in Inner Mongolia (the Chinese love numeracy).
Most Chinese artists and designers welcome the Olympics and Shanghai's 2010 Expo as significant steps in opening up their country. Few want to give up harmony, but many are beginning to be as fascinated by creativity as we are in the West and they are discovering that the devil has many of the best tunes.
Meanwhile in design studios, in lane boutiques and on the streets, as well as the corporate headquarters of global brands, people are wondering whether China's future lies in Western designs or in a resurrected Chinese creativity. One thing, as Deng Min says, is certain: whatever sells, China will make.
John Howkins is a visiting professor at the Shanghai School of Creativity, Shanghai Theatre Academy, and author of The Creative Economy.