To appreciate the weirdness of the opening party for the Ullens Centre for Contemporary Art (Ucca), the latest addition to Beijing's booming contemporary art scene, it is necessary to imagine the scenario turned on its head. Imagine a multimillionaire Chinese collector coming to London to open a gallery showcasing British contemporary art. Then imagine him throwing a launch party at which about 90 per cent of the invited guests are Chinese. The speeches are in Chinese, the food and drink are Chinese - even the theatre troupe booked to entertain the guests has been shipped in from China. The token nod towards native culture is one table of bewildered British artists, who have all been seated together.
How would the British art world react to that? The scene when Ucca opened its doors for the first time this month was roughly equivalent. A cavernous hall in Beijing's trendy Dashanzi art district was filled with wealthy-looking westerners, the men in well-cut dinner jackets and the suspiciously taut-faced women in couture dresses and furs. Lobster and caviar were on the menu, and entertainment came from the Spanish theatre company La Fura dels Baus. More than 50 journalists, including your correspondent, had been shipped in from all over the world courtesy of the gallery's Belgian owners, Guy and Myriam Ullens, whose fortune comes largely from sugar, and from WeightWatchers (a money-spinning combination if ever there was one).
The scene would not have looked out of place in any western capital, but in Beijing this was something very new. Chinese contemporary art has been creeping up in value over the past two decades, but recently, fuelled by a global interest in the world's fastest-rising superpower, it has gone through the roof. In October, the painter Yue Minjun sold a work, Execution, for £2.9m at Sotheby's - a record for a Chinese contemporary artist. Charles Saatchi has been collecting the haunting portraits of Zhang Xiaogang, who has outsold Damien Hirst and Jeff Koons. Major galleries are getting in on the act - Tate Liverpool's "The Real Thing" this year was one of the first big UK shows, with more to come from the Serpentine and at the Victoria and Albert Museum in 2008. The New York Guggenheim recently became the first US museum to appoint a dedicated senior curator of Asian contemporary art.
All this international attention is inevitably transforming what has, until relatively recently, been an edgy, underground scene. The Dashanzi art district, where Ucca is situated, looks like Beijing's answer to Hoxton, filled with small, trendily run-down galleries and young people with asymmetrical hairstyles. However, until the late 1990s, the industrial buildings that line its streets were functioning factories, producing electrical components for satellites and armaments. As industry moved out, artists began to congregate there, attracted by the low rents and large spaces. Many had moved to Beijing from rural areas illegally, and they were viewed with suspicion by their neighbours and the authorities alike. "The landlords were always trying to get rid of us and turn the land over to real-estate companies," says Lu Jie, director of the Long March Space, one of the first galleries to open in Dashanzi (The Way I See It, page 37). "They didn't look upon art as a viable alternative." It was an era in which the communist government did not look favourably upon artists; many of the most prominent had left the country following the uprisings of 1989.
As you walk around Dashanzi now, those days seem long gone. The art district has become one of Beijing's tourist attractions, and the galleries, which show everything from gritty documentary photography to brash, cartoonish pop art, appear to be doing a roaring trade. International heavyweights are also establishing a presence there; the Galleria Continua is showing a selection of works by the sculptor Anish Kapoor.
The rapid commercialisation of the art scene has, however, prompted soul-searching. "Being an artist is not what it used to be," says Dong Qiang, a professor of art at Beijing University. "It has become about making money." What with the speed of the change, Chinese contemporary art lacks intellectual foundations solid enough to weather the windfall, he argues. "This is a new thing for China. People don't have the educational background to distinguish between good and bad art. Collectors think of it as decoration, and artists do what they are told."
A look around the galleries in Dashanzi and elsewhere in Beijing confirms some of Professor Dong's fears. Much of the work seems unremarkable and rather safe. Yue Minjun's trademark laughing figures (pictured left) are omnipresent, peering from billboards and gallery walls and peppering sculpture parks; once considered a subversive comment on the new China, they have become a kind of shorthand for "funky Beijing" (one wonders whether the artist considers the breathtaking price tags worthy compensation for this development). A survey of work at Today, a Chinese-run institution that proudly claims to be "Beijing's first independent contemporary art gallery" is full of truly horrible sculptures and paintings that look as if they belong in an exhibition of A-level artwork.
And yet amid the dross lurks the odd gem, evidence that artists are continuing to explore tensions in Chinese society, and to test the limits of free expression. At the Today gallery Think Carefully, Where Have You Been Yesterday?, a video work by the Shanghainese artist Shi Yong, uses interrogation methods employed by the Red Guards during the Cultural Revolution to question three characters from modern China: a young gay man, a civil servant involved in a corruption case, and a poet jailed for drug use. The results are both revealing and discomforting. At the smaller Universal Studios gallery, Qiu Anxiong has created an atmospheric installation using a whole train carriage filled with video screens; footage from modern Chinese history plays on these, including disturbing scenes from the Cultural Revolution.
Most impressive is Lu Jie's epic Long March Project. For the past five years, he has been retracing the original 8,000-mile route covered by Mao Zedong's revolutionary army, taking artists with him to work among rural people who would otherwise never have had any contact with contemporary art. "We wanted to revisit the context in which China decided that revolution was - is - the answer," Lu says. "This time we are taking the ideology of creativity and expression." He initially financed the project from his own pocket, and he freely admits that today it would be impossible to get such an ambitious idea off the ground: "The market is too inflated."
Improving the intellectual foundations of Chinese contemporary art is an important element of the mission statement for Ucca, which is a not-for-profit institution. Guy Ullens, who has a long connection with China and a large collection of contemporary Chinese art, is careful to emphasise that eventually it should become a Chinese-run institution. "This is not just about foreigners coming in and imposing anything."
Whether it will succeed in this is another matter. Professor Dong is clear that the centre will face some public relations difficulties. "Chinese teachers will not want to bring their students," he says. "It will be seen as a kind of conquest." Others in the Chinese contingent at the opening of the art centre were more positive, however. "The good thing about Ucca is that it raises the bar, and shows Chinese institutions that a Beijing gallery can be done to a high professional standard," said Liu Xiaodong, one of China's most internationally successful painters. "I have always been reluctant to show my work in China because the curators and the people running the galleries are often not very experienced."
Further challenges are posed by the authorities, to whom catalogues must be submitted for vetting. Ucca's first show - "85 New Wave: the Birth of Chinese Contemporary Art" - examines a politically contentious movement that was intimately linked with the 1989 student protests. The texts in the gallery have evidently been carefully worded; on a timeline, the entry for 4 June 1989 reads: "Martial law forces begin to clear out Tiananmen Square in the early morning" - no mention of the massacre that left up to 3,000 dead and sent many artists scurrying into exile. According to a well-informed guest at the opening, the exhibition had originally covered the years 1985-89, but this was extended to 1990 to avoid any explicit political implication.
The foreign journalists were fascinated by the question of censorship - much to the annoyance of many Chinese contemporary art world veterans, who gave the impression that they considered talking about such things rather vulgar. Ucca's chief curator, Colin Chinnery, assured the visitors that "there are no political issues" with any of the work on show. Karen Smith, a British expat and author of Nine Lives: the Birth of Avant-Garde Art in New China (published by Scalo), insisted that it simply wasn't an issue. "There is no censorship here," she said. Others, however, talked darkly of the secret police trawling the galleries in Dashanzi, and of contentious images hastily being removed prior to official visits.
Certainly, it seems that political control over the arts is not exercised in the systematic way westerners tend to imagine. And with such significant international interest in Chinese art, it will become increasingly difficult for the authorities to suppress China's abundant creativity. Let's hope Ucca faces stiff competition.
Five to watch
Ai Wei Wei was raised at a labour camp in north-western China, and is now one of the most influential figures on the Beijing art scene. He helped to organise the avant-garde "Star" group in the early 1980s, and gained a reputation for iconoclasm by notoriously co-curating an exhibition entitled "Fuck Off!" to coincide with the Shanghai Biennale in 2000. More recently, he has gone into architecture, collaborating with the Swiss firm Herzog & de Meuron on the design for the Beijing Olympic Stadium. He has since withdrawn his support for the project, comparing China's Olympic project to a "fake smile" obscuring the country's troubled reality.
Cai Guo-Qiang is also involved in the Olympics as art director. As an artist, he is best known for his spectacular gunpowder installations, and for curating the first ever China pavilion at the Venice Biennale in 2005. A mid-career retrospective of his work opens in February at the Guggenheim Museum in New York.
Huang Yong Ping left China following the political upheavals of 1989, and now lives in France. He was one of the founder members of the Xiamen Dada group. Huang is famous for his large-scale installations, including 2002's The Nightmare of George V (pictured right), which he has said is a comment on colonial history based on King George V's 1911 tiger-shooting expedition to Nepal.
Yue Minjun is often grouped with the "cynical realist" movement of painters that emerged in the early 1990s - though he has rejected that label. He is best known for his brash, exaggerated images of himself frozen in laughter (such as Untitled, above). His painting Execution became the most expensive work ever by a modern Chinese artist when it sold at auction for £2.9m at Sotheby's in London last month.
Liu Xiaodong is perhaps the country's pre-eminent realist painter. His reputation is built on direct, often harsh, depictions of everyday life in a changing China, and features prostitutes and transsexuals, among others. His work features in "The Painting of Modern Life" exhibition, which runs at the Hayward Gallery on London's South Bank until 30 December.