The Case for China’s Culture Assessing Mainland China for Potential Art Market Growth Capabilities Research & Analysis by Sonyah Seiden Under supervision of Sanja Dudukovic, Ph.D. & Johanna Fassl, Ph.D.

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Table of ContentsIntroduction & Statement of Intent 3 !Prerequisite Consideration 5 Socio-Political Environment 5 Relevant Heterodox Economic Theories 9 The Market At a Glance 11 Historical Development Timeline 11 Price Distribution 12 Influence of the Buyer 13 Market Concentrations 14 !Mainland China: Market Analyses Assessing Accessibility of Cultural Supply by Region using K-means Clustering 16 Estimating Potential of Cultural Supply & Demand with Econometric Modeling 18 !Understanding the Future 20 Conclusions & Final Remarks 21 !References 22

Every piece of art tells a story. The work’s latent value is thanks, in part, to the experiences and culture captured through its creation. The idea that art can transfer its experiential and aesthetic value onto an owner motivates individuals to become involved in the art trade—a desire external to monetary considerations. As the market expands in current and potential monetary value, in-depth understanding of both monetary and non-monetary outcomes is vital within our data-obsessed culture. Analysts often attempt to capture and explain the economics of aesthetics through primarily monetary data; however, returns, portfolio diversification, art genre profitability, and auction results fail to fully explain the market. This is particularly true of emerging markets, where socio-political and infrastructural problems limit full understanding of the market’s capacity for cultural consumption. Unlike a developed economy, you cannot project future returns and growth capacity through historical monetary outcomes. Such a lack of insight is succinctly explained through Amartya Sen’s capability approach—the heterodox economic theory, which defines development as the access to services and goods available, rather than facile measures such as GDP, trade flows, and even popular indices.

Capabilities, or functionings, explain success in terms of attainment of individual needs relative to the values of the society in question. Understanding their development from a capabilities approach paints a different portrait. The Chinese Art Market’s future potential should be viewed through this lens to be understood relative to the socio-political context. Martin Jacques views this necessity in relation to China, explicating,

Understanding modernity and development means viewing the way the country’s history and culture shaped its path towards economic success. 1

In measuring the Chinese Art Market’s current status (and subsequent potential) more accurately, accessibility of art is measured in terms of Chinese ethics and values. And China’s case, the State’s values are one in the same as its nationals’. Why, in a country where cultural property rights and unity outweigh private property rights and independent capital pursuits, would the metrics of assessment be based on normative, Western theory? Graduate-level studies, financial reports, market assessments, are giving way to cultural hegemony that the Communist Chinese government has been aiming to combat

Introduction & Statement of Intent

“It’s a widespread assumption in the West that as countries modernize, they also westernize. This is an illusion, it’s an assumption that modernity is a product, simply, of product

competition and markets.”

Martin Jacques, 2010, “Understanding the Rise of China,” given at TedSalon, London.1

since its initiation. The imperativeness of an alternative approach is twofold. On the one hand, educators and analysts are cognizant of the destructive potential of applying Western economic theory and analysis to non-Western cultures. On the other, the recent policy shifts beginning in 2013 allowing art firms to operate independently on Mainland China necessitates mindfulness in capturing and respecting the importance of nation branding and cultural accessibility in this largely untapped market.

The misrepresentation of the market primarily lies in accessibility of information as a result of differing capabilities. Data on the market feasible for study is concentrated in Hong Kong, where the 3 leading auction houses (Sotheby’s HK, Christie’s HK, and Polycorp Beijing, Int.) are based. Hong Kong’s status as a Specialized Economic Region (hereby referred to as an SAR) allows for trade and commerce practices markedly different from Mainland China. Their business practices, legal matters, and market 2

capabilities differ greatly due to long-term British occupation. After their emancipation, many cultural capabilities remained that did barely existed on the mainland.

Capabilities of buying and selling contemporary and antique art, of displaying art without explicit state approval, of developing financial tools and financialization of the market, of collecting data and producing analysis relevant to that market. The differing Gini coefficients attest to the greater capabilities. Their economy is at an advantage, and excluded from many state restrictions. Subsequently, their financial demographics are skewed towards the upper echelons with the highest concentration of millionaires and multi-millionaires, and continual growth in this regard. Given that this is the concentration of powerful privately operated institutions, analysts believe this data is consistent and representative of current market status. However, the widespread issues in continuity and accuracy, not to mention corruption lessen the impact and usefulness of any conclusions. This is not to say state-provided, or Mainland focused data is inherently better, but to further diminish the weight placed onto conclusions from this limited data as valid and representative of a large nation and market. Investors choosing to venture into the newly opened market of Mainland China would be remiss in basing decisions of off conclusions of Hong Kong. This is also true of analysis on Shanghai and Beijing, which also have remarkably different demographics than surrounding provinces.

This research project aims to quantitatively assess the distribution of accessibility across Mainland China in accordance with Sen’s Capability Approach. It will re-focus the Mainland’s “potential” in view of State Party goals of cultural unity and national pride. Furthermore, it references

Christine Kaufmann, PhD, and Johannes Chan, 2008, "Legislative Process In China, Hong 2

Kong, And Switzerland,”lecture given at the University of Zurich.

importance of cultural consumption and capacity in a perspective relevant to the contemporaneous legislative shift and rapidly changing market environment. !!!!

The rise and development of communist theory in Chinese political evolution carried with it strong anti-western sentiments embedded within Nationalist goals and propaganda. Nationalists believed the efficacy and superiority of the Chinese communist methodology would be self-evident in their subsequent development and national strength, but also promulgated superiority within their country through nationalist pride in art, literature, and performing arts of the Chinese people. Rather than considering art and culture as a consequence of development, as is generally believed in normative developmental economic theory, Chairman Mao and his party believed it was also a driving factor of development, as well as a source of cohesion. This motivated the government to provide capabilities for cultural consumption throughout the country. Such culture was initially formalized and standardized. It rejected traditional thought, and re-appropriated traditional art forms to exemplify the Party’s message. Culture was utilized to instill pride, and to ensure the strength of a large, growing working force that must be able to withstand the hardships of the State-Capitalist developmental process soon after witnessing a brutal and disheartening civil war.

Through legislature, Congress transcripts, and addresses by Chairman Mao and other government officials it is evident the government considers themselves the primary providers, educators, and regulators of culture. Initially, this meant cultural cleansing—a euphemism for the widespread destruction of antiques and cultural artifacts, historical sites, and religious grounds. The actual loss of traditional or pre-communist culture is not fully known. This decision explains, in part, the continually high demand for traditional art forms and antiques with Chinese nationals. However, it must be noted that the period of cultural reform is not necessarily regarded as destructive or shameful today. The very action of destroying old culture and forming new culture for consumption, and the Chinese peoples’ tolerance for this, exemplifies the belief in their central government.

In the highly collectivistic culture, the Chinese people fully engage the belief that what is good for the State is good for the individual—justifying years of sacrifice and tolerance of unbearable conditions in sight of the country’s

“The most important political value for the Chinese is unity.” —Martin Jacques

Socio-Political Environment Prerequisite Considerations

future. In this sense, any capability provided for by the State may be there to purely achieve State goals, but if the government decides this is what is necessary for the country the steadfastly people will follow suit. Say’s Law, a well-quoted theorem in economics, comes into play takes a new perspective. Jean-Baptiste Say, an 18th century philosopher and economist, postulated that the production or supply of a good will also the production of demand. Where the state produces cultural capabilities, Nationals will consume. This connects with Sen’s Capability Approach by transforming cultural commodities into functions and capabilities, rather than monetarily quantified goods. In providing the capability for cultural consumption, and thus providing a source of unity and national pride, the government ensures ideological control over nationals in the face of development and liberalization.

The State cannot afford to lose its ideological position at the hands of a liberalized economy, and surely cannot risk overtake of the very same Western values they destabilized through the communist regime. This presents a dichotomy within the existence of the art market itself. Art proves to be a highly effective soft power tool, and economically diversifies their market representation; it is a sector for significant growth thanks to the growing millionaire and billionaire class, and acts as a landmark for their developmental success. However, art within the communist government has a particular value external to the market. First and foremost, art is a source of propaganda to tie cultural and social values to economic goals. What was originally motivated by state goals has, in some sense, allowed the capitalist structure to become pervasive within their economy—placing the socio-ideological value at risk.

Furthering this thought, the recent liberalization of the Mainland to allow foreign vendors to operate independently seems contradictory to the ideology and motivations of the State. Rather than putting the State at risk, the strength of national pride instead maintains State goals on behalf of national consumers while lessening the threat of foreign ideals. Cultural and economic ideology is one and the same, as evidenced by the central cultural policy from the initiation of the People’s movement towards State Communism. The National Policy for Protection of Cultural Relics states, “People’s governments at or above county level shall incorporate the undertaking of the protection of cultural relics into their own plans for national economic and social development;” additionally demanding that increased economic prosperity must equate to increased budget for the acquisition and maintenance of

“Art is mute when money talks” —James Siena

cultural artifacts. While this policy is from 2007, placement of cultural 3

advancement and education is not a recent addition. Commenting on the development of China’s Art Law, Zhou Lin explains that art “…suits the socialist market mechanism” and the cultural potential as well as financial and political benefit of fringe markets of Beijing, Hong Kong, and Shanghai, necessitate recruitment of educated youth to become involved in art law on all levels.

This understanding is not new information. In fact, Chairman Mao incorporated cultural value and production from the very beginning. Before even becoming Chairman of the People’s Party, he addressed culture at a conference in Yenan in 1942, stating,

“In the world today all culture, all literature and art belong to definite classes and are geared to definite political lines. There is in fact no such thing as art for art’s sake; art that stands above classes or art that is detached from or independent of politics…they are, as Lenin said, cogs and wheels in the whole revolutionary machine. Therefore, party work in literature and art occupies a definite and assigned position in Party revolutionary work as a whole and is subordinated to the revolutionary tasks set by the Party in a given revolutionary period.”

Cultural production also has the aim of dissuading nationals from indulging Western ideals. This is not to say the Chinese government does not want consumption or does not want consumerism, rather, they want to prove through their development in can be achieved in a controlled, non-Western way. Susan M. Pearce develops thoughts on cultural production in her article, “Why Do We Collect?” Objects, and for all intents and purposes Chinese cultural production does focus on objects, and not necessarily art in the traditional sense. Pearce likens objects and t h e i r s i g n i fi c a n c e t o language, describing their importance as establishing a creative reality through their production. The materiality of an object is what gives them “…the capacity to carry the past physically in the present.” 4

This plays a part in explaining how the government addresses the dichotomy within the art market. Cultural production and the art market are not inherently interactive. Government initiative to truly integrate the modern art market into their economy began with the expansion of governmental

“[Artists] played a role in establishing, not simply conforming to, the Maoist view of history” —Chang-Tai Hung

Article 10 of UNESCO’s Law Of The People's Republic Of China On Protection Of Cultural 3

Relics, 2007, UNESCO Cultural Heritage Laws Database.

Ibid.4

promotion of cultural industries in 2000, which was subsequently incorporated into the 2001 establishment of the tenth 5-year plans. This included state 5

funding of biennials and triennials, the support of private gallery foundations, renovating the National Museum, and preparing the economy for the introduction of autonomous foreign investments by increasing involvement of international partners and world-renowned art fairs, galleries, and auction houses—a phenomena Olaf Velthuis defines as the “accumulation of symbolic capital.” The government primarily addresses this goal through its divisions of 6

culture and propaganda. In every Congressional address, culture comes into the discussion. In 2007 Liu Yunshan, Politburo leader of propaganda asserted the importance of artists studying classical communist literature—Leninism, Marxism, Mao Zedong’s and Deng Xiaoping’s literature, to incorporate and allow party ideology to guide their work. He furthers this statement by 7

asserting that “Advanced culture represents the hope of a nation and the future of a country;” it is evident within primary sources from government members and Party literature that they see an inherent necessity of cultural production to non-Western development.

One area within Party policy where this is particularly obvious addresses cultural relics. As outlined within UNESCO’s English translation of Law of the People’s Republic of China on Protection of Cultural Relics, the State’s aim is to provide a legal structure “…with a view to strengthening the protection of cultural relics, inheriting the splendid historical and cultural legacy of the Chinese nation, promoting scientific research, conducting education in patriotism and in the revolutionary tradition, and building a socialist society with cultural, ideological, and material progress.” This law oversees virtually any historical site, cultural or modern, valuable art and artisanal products, important documents, manuscripts or books, and any other object embodying the ideals of their socialist identity. The State description of cultural relics is anything that embodies or exemplifies Party values and history—with preference for pieces from Mao and pre-Mao eras. One thing to note is that despite the recent liberalization across all markets of China, they remain steadfast in their protection of the sale and collection of cultural relics against foreigners.

While a background understanding in their cultural development and sociopolitical standing is crucial to understanding the process and justification of their adamant non-Western developmental path fully, there are a few heterodox Art Historical and Economic theories. Within the context of these

Franziska Koch, 2012, “China’s Images On Display: Contemporary Chinese Art and Its 5

Western Reception in the Age of Globalization,” Phillipps-Universität Theses, 2.

Olaf Velthuis, 2002, Talking Prices, Rotterdam.6

Quoted and translated by World News Connection.7

theories the policy structure takes on a new perspective, and allows for its subtleties to be better captured within market analysis. !!!!

The art market in any sense is not properly captured by normative economic and market theory. Art market theorists and researchers consistently state the difficulty in assessing the market from a strictly economic standpoint. Qualitative information such as desire to collect, rarity of the work, and the art market equivalent of ‘insider trading’ including brokered deals, inflated bids, museum donations, and other such politics make the breadth of variables necessary to study the market too sizable to be fully captured. In this sense, the art market requires heterodox understanding—alternative approaches for an alternative market. Beginning through the 1970’s, heterodox economic discussions centered on non-Western perspectives and emphasized the process of development in light of the frequent neoliberal and neocolonial prescriptive viewpoints. The primary perspectives considered here are Raul Prebisch’s understanding of trade, and Amartya Sen’s capabilities approach.

Prebisch, an Argentinian who leaned towards a marxist perspective, explained the process of development for underdeveloped nations as one that is particularly vulnerable. Pointing out the flaw in logic of neoliberal developmental theory, he argued that a country that develops and grows through an export economy is one that remains dependent on its western counterparts. Instead, Prebisch argued that a developing nation needs to 8

grow its domestic market before opening up for trade and foreign investment, in order to truly compete with established nations. Economic policy in China 9

approaches this perspective by excluding foreign investors and controlling growth of their export economy.

Following Prebisch’s theory, once the economy is internally strong the country can begin to develop its trade and export industry. China has only recently utilized a number of artificial inflationary policies, granted trade agreements, and opened up investment to foreigners, signifying the pivotal shift in economic growth. The Party feels, at this point, their domestic markets can support the dynamic shift towards the next stage of development. Furthermore, we can view the art market as a unique space where the types of art imported and exported are more similar in quality and type than the comparison of imports and exports within other markets. For example, Chinese artists export

Relevant Heterodox Theories Prerequisite Considerations

Theory later developed into the dependency hypothesis. See Raul Prebisch’s The 8

Development of Latin America and its Principal Problems.

Relative to quality and type of imports versus exports, incorporated into the Prebisch-Singer 9

hypothesis.

their pieces to western markets to obtain higher yields, even break records, and gain critical international acclaim; simultaneously Chinese collectors and auction houses are demanding a greater diversity in quality western pieces. Laura Verdi describes this distinctive flexibility and capability of art in her think piece “New Arts for a New Citizenship.” In relation to the understanding of freedom and freedom of choice in consumerist markets, Verdi asserts that, 10

Art therefore proves to be an incredibly successful soft power tool for China—whose government is adamant in asserting the cultural significance of Chinese history. It reinforces Chinese historical significance, while minimizing social fractionalization across cultures. This justifies the heavy involvement and stimulus within the art market. Where normative economic theory asserts that cultural development and significance is an inherent result of high levels of development, Chinese economic theory and history displays that it can also be a component to development itself.

Moving on to our secondary economic theory, Sen’s capabilities approach, as described in his theory on Cultural Economics, diverges from the cultural hegemony of western nations by providing a flexible economic theory that places the development as access or capability of attaining a valued function. This makes development relative to the culture within, as opposed to a standardized financial landmark. First and foremost, Sen believes that access to valued services and goods is the key component to allow consumption to being. Up until this point, the discussion has been irrespective of the accessibility. In fact, when considering accessibility our understanding of developmental success and market significance shifts. The next few sections focus on the successes and failures of the market within the frame of success as access to the art market across the country. In doing so, potential investment is viewed from a diversified standpoint. Given the recent shift in policy allowing autonomous foreign investment, the possibilities of investment expand, yet make it more difficult to navigate through options. Taking in alternative perspectives facilitates the decision-making process for anyone looking to invest in China's rapidly shifting cultural economy. ! !

Laura Verdi, "New Arts for a New Citizenship,” in Theory In Action 1, 3, 2008: pp. 3710

“The role that art can play within such a scenario takes twofold valence: on the one hand facilitating meeting and exchange practices;

on the other, safeguarding and strengthening the exclusiveness of cultural and ethnic identities.”

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Historical Development At a Glance

•China drops to second place for global market share after 5 years in first •Market share at 30%

•Copyright Law ratified to protect artists and fine arts industry, augmenting pre-existing property laws

•Hong Kong achieves sovereignty as a Special Administrative Region

•China’s art market share estimated at 1% •Tenth Plan focuses on technological industries & innovation

2007

2001Tenth Plan

Twelfth Plan2011

2015Thirteenth Plan

Eleventh Plan2006

1991

1997

1996

•Christie’s becomes the first auction house to operate independently on the mainland •Mainland reaches a record 382 registered auction houses

2013

2008

•Remarkable growth and market financialization between 2003-2004 leads to newfound attention on the market

2003 2004

•Government expands breadth of ‘cultural industries’ to include fine art & contemporary art markets

2000

•Despite the global crisis, art market growth remains stable with a quick recovery through 2009

•Twelfth Plan focuses on ‘quality growth’ •15% increase of minimum wage, stimulus of high-end industry, and artificially low inflation to stimulate domestic spending

•Revisal of cultural relics legislation—continued protectionism

•Auction Law of 1996 prohibits auction houses from conducting private sales

•Eleventh Plan focuses on promoting socio-economic equality

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Data for this table was obtained from ArtPrice Global Market Report 2015

The Gini coefficients reported by the Chinese and Hong Kong governments and external sources fluctuate between 0.45-0.55, and while this is on the higher end of inequality it is only marginally higher than the United States’ 0.411 reported in 2013 by the World Bank. If China’s inequality measures are relatively similar to its competitor, what makes the market far less accessible? Firstly, one must consider the influence of Chinese collectors and market concentration.

The Chinese art market, p r i m a r i l y u n d e r s t o o d through financial outcomes, has diversified its selection, while increasing its prices. The emergence of big ticket Western works perpetuate reliance on big players to take on the high costs and donate works. Ar tprice reported an increase from 8 % t o 3 5 % i n p r i c e discrepancies be tween Hong Kong & Taiwan and mainland China from 2014 to 2015 in its 2015 global report. !13% of pieces sold in China fall in the between the 99th and 100th percentile of global prices. !Conversely, a mere 2.05% of sales fall between the 80th and 75th percentiles, and less than 0.5% of sales fall between the 40th and 50th percentiles. In other words, a minute fraction of t r a n s a c t i o n s i n v o l v e affordable art.

Price Distributions At a Glance

100 $179,365,000

99 $341,000

98 $149,725

96 $63,580

95 $48,480

94 $38,140

92 $26,330

90 $19,320

80 $6,875

75 $4,886

70 $3,595

60 $2,050

50 $1,234

40 $768

30 $488

20 $292

10 $149

Average sale price in China is $43,000

13% of pieces sell for $5,000,000+

Glo

bal P

erce

ntile

Dist

ribut

ion

of P

rices

2.05% of pieces sell for less than $5,000

0.23% of pieces sell for less than $1,000

Percentage of Sale Prices in China

Art valued over $20,000 can be considered an investment

!!Looking at patterns of

auction returns, Jia Guo utilized 651,907 annual pair-wise returns from Chinese auction records ranging from 2000-2011—a critical decade of establishment for the market. In looking to create an index establishing risk and return characteristics, he discovered the surprising inelasticity of demand for fine art, causing a consistent upward drive of prices.

He furthered the analysis by assessing the success of art as a divers ified investment v ia correlation analysis with asset returns of normative investments, such as bonds and the S&P 500. Guo is particularly interested in expl icat ing the influence of corruption within the art market, which he asserts is a significant component to the powers of the marginal buyer. This is not a distinct characteristic of the art market; in fact, corruption is prevalent in virtually all financially-heavy markets wether it is artificially inflated auction prices, insider trading, black market schemes, such corruption is difficult to locate and track, let alone quantify.

The outcome of his analysis—a developed index—measures annual pair-wise returns on auction sales in relation to size, presence of authenticity, prestige or provenance, rarity of medium, style, and subject, prior exhibitions or publications of the artist and piece. It also includes comparisons of estimates to final hammer price, and accounts for which auction house sold the lot. Using hedonic regression on data ranging from May 1994 to September 2011 his dataset included a sizable 1,994,178 lots that totaled to 200 billion USD in sales turnover. Of the sales turnover, classical paintings accounted for 47%, followed by oil paintings and Chinese porcelain at 11% each.

Key points to take away from his analysis include the cyclical market slowdown during the first quarter, when a number of holidays take place surrounding the Chinese New Year. In terms of medium, oil paintings do well and cost is positively correlated to size—confirming general art market understanding. The average rate of return yielded was 0.3578, or 35.78%. In comparison to Wester art markets, this is a better outcome, though returns of Chinese auction lots experience more variability, meaning higher risk

“…Prices for artworks, especially in tertiary markets such as auction houses, are driven by the marginal buyer rather than the forces of aggregate demand and supply.” —Jia Guo

Modigliani’s Reclining Nude sold for a record-breaking $170 million at Sotheby’s New York to billionaires Liu Yiqian and Wang Wei. Responding to shifts in demand, auctions of western art in China continually increase with sustained success. (Image source: The Guardian)

“What Drives the Chinese Art Market? The Case of Elegant Bribery” Jia Guo

The Influence of the Buyer Literary Review 1

!The power of collectors is due, in part, to the physical concentration of the market

within three primary cities. Beijing and Shanghai on the mainland, and Hong Kong off the coast, consistently display the highest number of galleries, private collections, museums, and auctioned lots—not to mention higher returns and frequent record-breaking sales. These cities also enjoy a large millionaire and billionaire class. Citibank Hong Kong Market Insight cites a 22% increase in millionaires living in Hong Kong from 2012 to 2014. This noticeable increase in purchasing power has been attracting world-renowned names for representation in China. Galleries such as Gagosian and Guggenheim have collections, and a number of private industries have expanded their reach to have galleries within these primary cities, as well. Reinforcing the luxury experience, quality art is primarily concentrated to these areas, while the majority of the mainland is granted access to state-led exhibitions.

Concentration within Hong Kong is intuitive, as the SAR grants relief from regular tax obligations of the State-Communist structure. Additionally, the long term pre-existing British influence facilitated the establishment of the art market in the highly international city. Beijing and Shanghai, on the other hand, have their concentration of businesses to thank for their cultural industry. The strong urban wealthy population contradicts the status of the populace—establishing the demand needed to justify big names entering the market. These institutions are benefitting from the growing strength of collectors, and the general view of art as a safe investment to diversify your portfolio. Deloitte Bank and ArtTactic express their expectations 11

for continued growth, stating, !

Hong Kong has received significant attention, Beijing is the leading city by market share for 2015, followed by Hong Kong, and then Shanghai. However, Hong Kong showed to be the only city with positive returns, leading ArtPrice to name it an “Art Market Eldorado.” 12

In view of the changing market dynamics and cultural consumption within China, the government has engaged cooperation between the Ministry of Finance and People’s Bank of CHina, and the Ministry of Culture to produce the official “Opinion Regarding the Promotion of Further Cooperation Between Finance and Culture.” The general trend towards financialization is visible across all markets, though takes on a number of complications within the art market. Despite the difficulties in integrating the two markets, the Chinese government

Understanding Market Concentrations Hong Kong, Beijing, and Shanghai

See Art & Finance Report, 2014.11

12

“The art and finance industry in China is likely to grow as the Chinese government has adopted a proactive role in creating closer cooperation between the financial and cultural sectors. The strong appetite for art as an investment among Chinese buyers is likely to

continue to be a major motivation and a key dynamic in the Chinese art market going forward…”

seems adamant in succeeding, recognizing the benefit to economic development. Part of this entails encouraging firms to offer a greater diversity in financial services—for example, Chinese collectors have gained a reputation for purchasing record-breaking pieces on credit cards to ameliorate their future line of equity and credit scores.

The skewed concentration towards these three cities is no surprise. In fact, it is largely acknowledged throughout market reports. Though, not much is done to address the converse: understanding general accessibility and alternative areas for investment that focus on the growing middle class, and establishing art accessibility across socio-economic statuses. Clare McAndrew puts it well, explaining that “…the importance of mainland China as a center for domestic sales of art is a relatively new phenomenon…” 13

Anyone who has a basic understanding of developmental economics would find this to be no surprise. A comparison between GDP per capita and income distribution reveals the discrepancies between rural and urban areas. The map below, provided by China Briefing, displays the distribution of disposable income by province—with darker orange being a greater percentage below average, and darker blue being a greater percentage above average. Clearly, coastal cities situated near Hong Kong, as well as Tianjin and Beijing, are remarkably high while the fringe regions bordering other countries are remarkably impoverished. The difficulty in understanding accessibility of art, given the newfound

opportunities for investment on the mainland, necessitated an alternative method of analysis

Clare McAndrew, 2014, Chinese Art Market Rebounds to $8.5 Billion in 2013, Artnet.13

looking into cultural consumption achieved through Party goals. A look into the classification of regions based on government-provided cultural supply proved an effective method in understanding development through Sen’s capabilities approach. By viewing development respective to State goals, we can see how their targeted cultural development has played out, and whether their goal is on the track towards successful development.

Based on five inputs of Art Performance Troupes, Performance Spaces, Public Libraries, Museums, and Cultural Centers founded and funded by the State, the K-means clustering technique allows for the grouping of regions based on data provided by the National Bureau of Statistics of China. The outcomes are summarized below into three categories.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Classifying Accessibility K-Means Clustering

low Cultural Supply

High Cultural Supply!Hebei Henan Hunan Sichuan

GDP Rank 21 14 12 7

Mid Cultural Supply!Shanxi Inner Mongolia Liaoning Heilongjiang Jiangsu Zhejiang Anhui Fujian Jiangxi Shandong Hubei Guangdong Guangxi Yunnan Shaanxi Gansu Xingjiang

GDP Rank 16 22 24 20 27 28 6 23 8 25 18 26 5 3 10 2 17

!Beijing Tianjin Jilin Shanghai Hainan Chongqing Guizhou Tibet Qinghai Ningxia

GDP Rank 30 29 19 31 13 15 1 4 9 11

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(Politburo Member Liu Yunshan Urges Artists To Publicize 17th Party Congress Spirit)." World News Connection, November 07, 2007., Regional Business News, EBSCOhost (accessed November 24, 2014). !

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