"Art has become a global business in recent decades," author Noah Horowitz said in his book, according to Reuters. "If we want to fully understand how the world of art and our relationship with art has changed, we must understand the financial forces involved. Art and art have never been closer to each other."

According to Frost Sullivan's report, art finance is broadly defined as a series of financial services that take artworks as financial assets and use them for financial management of individuals or institutions, transforming the value of artworks into financial instruments. Art investment and art financing are two major activities of art financial market. The development of the art market has generally been driven by extraordinary growth in wealth creation, particularly in emerging markets such as Asia.

In recent years, the development of art finance has indeed attracted more and more attention worldwide. With the extraordinary prosperity of the art market today, art finance has formed a top-down industrial chain and truly entered the stage of systematic and industrial development.

The road to the development of Chinese art finance

In terms of total art sales, the global art market grew from $20 billion to $68 billion between 2003 and 2014, according to the Frost Sullivan Report. Despite the financial crisis of 2008, the compound annual growth rate of total art sales in the global art market was about 12% between 2003 and 2014. China is the world's second-largest art market by volume in 2014.

With the increase of per capita GDP, the consumption structure of the Chinese public has entered a rapid transformation period, and the consumption of culture and art has become one of the important forces of this transformation, representing the arrival of the era of art consumption. According to the release of the Annual Research Report on the Development of Chinese Art Finance (2015), in 2015, the annual industrial market scale of Chinese art finance was close to 55 billion yuan. The process of art assets is becoming the most important force supporting the current Chinese art market after the precipitous decline of the gift market.

According to the Frost Sullivan Report, it is expected that from 2016 to 2019, the transaction volume of China's art finance market will steadily increase at a CAGR of 5.0% to about 123.5 billion yuan in 2019. At the same time, driven by art assets, the forms of art finance are constantly enriched, and the enthusiasm of the financial system is also improving. All these indicate that the space for the development of art finance is getting broader and broader.

On the other hand, the Chinese Government has actively promoted close cooperation between the financial and cultural sectors. In 2010, the Ministry of Finance and the Ministry of Culture jointly issued the Guiding Opinions on Financial Support for the Revitalization, Development and Prosperity of the Cultural Industry, which is regarded as the benchmark for expanding and improving financial services for the cultural industry. In 2012, the Ministry of Culture promulgated the Cultural Reform and Development Plan during the 12th Five-Year Plan Period to strengthen the protection, utilization and inheritance of cultural heritage, improve the cultural market supervision system and strengthen foreign cultural exchanges and trade. In 2014, the People's Bank of China and the Ministry of Culture jointly issued the Opinions on In-depth Promotion of Cultural and Financial Cooperation to emphasize the cooperation between the financial and cultural industries, and encourage financial institutions to set up professional financial and cultural teams to provide specific services dedicated to the cultural industry.

The Measures on the Administration of Art Trade were promulgated by the Ministry of Culture on January 18, 2016, aiming to strengthen the management of art-related business activities, regulate art-related business operations, promote the prosperity of the art market and protect the legitimate rights and interests of creators, operators and consumers. All the above policies promote the further growth of China's art finance industry.

At the same time, the strong demand of Chinese buyers for art investment will continue to be the main incentive and major driving force for China's art financial market in the future, and it is expected that there will be major financial innovations in art and collectible assets in the future.

According to the Forrester Sullivan report, the growth of wealth creation has a positive impact on the art and collectibles market as a whole. In particular, China's high net worth individuals preferred to invest 7.9 trillion yuan of their total wealth in art in 2014. In addition, from 2009 to 2014, the amount of artworks invested by Chinese HNWIs rose at a compound annual growth rate of 26.9%.

It is widely believed that China's art industry will usher in a golden decade of explosive development, with a scale of more than one trillion yuan, and can accommodate hundreds of listed art companies. China's art finance industry is erupting year by year, driven by various factors. More and more banks and financial institutions launch art mortgage financing business, painting and calligraphy, antiques, jewelry and jade, money, postage, purple sand and other artworks can be mortgaged in the bank financing. At the same time, Forrester Sullivan reports that art collectors and owners are increasingly expressing interest in using art collections as collateral for loans. More owners are expected to use art collections as pawns in the coming years. Coupled with the increasing popularity of art as an asset investment and the improvement and expansion of auction channels, the Chinese art auction industry is thriving.