State of the art: Chinese market flounders

The Economist. Hello, and welcome to The Intelligence from The Economist. I'm your host, Rosie Blore. And I'm Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world. Read the headlines and you'd be forgiven for thinking there was a mass exodus from Britain. But when our correspondent dug into the data, the evidence wasn't so clear cut. And in the past, you could buy a loaf of bread or a pint of beer with it. Now, it will barely get you anything at all. As part of our World Ahead series, our obituaries editor mourns the death of the American penny. First up though. The property boom that started in China in the early two thousands became one of the fastest generators of wealth in history. Don Wineland is our China business and finance editor. Some of China's nouveau riche were keen to flash their newfound cash. One way of doing that was to get into the art market. They started buying very expensive pieces of art, and this was a way of flaunting their wealth. So we moved to the beautiful Modigliani, Lot 8, painted in Paris in 1718, $75,000,000. 75,000,000. $160,000,000. In 2015, Liu Echan, a cab driver turned property magnate, bought Amedeo Modigliani's painting, New Cochet at auction. I'm selling it. Last chance. All done. At $152,000,000. Sold here. 1561. Including the buyer's premium, he ended up paying a $170,000,000, the second highest price paid in an art auction at the time. And it wasn't just Leo who was buying art. The founder of Chinese property giant Evergrande also began buying a lot of art. There were lots of Chinese property tycoons, but companies like Evergrande and the Chinese property market itself started to fall apart in 2021. At the same time, Chinese art sales have slumped. So it sounds like the fates of the property market and the art market are just inextricably linked here. There's a straight line between those two slumps. I think that's correct. There's a number of factors that have contributed to Chinese art prices coming down. A big one was the COVID lockdowns. Capital controls have played a big role. Even the state's distaste for opulent spending probably has hurt the Chinese art market, but nothing really has taken a bigger toll than the collapse of China's property sector. Well, let's put some numbers to it. What is the size of the toll taken? So the art world is notoriously private. It's not always possible to see how much pieces of art sell for in the private market. But there's one index that's really, really good at tracking Chinese works of art. So we're no longer talking about the Modiglianis, we're talking about Chinese artists and the value at which their art is changing hands. So the Chinese Art Price Index tracks 327 works of Chinese art as they change hands between 1988 and 2022. And if we look at this index, we can see …