Wandering around the 798 Art Zone in Chaoyang District of Beijing on a weekday is enjoyable, particularly because there are none of the roaring crowds that descend on weekends or holidays. The downside is that many galleries are either empty or closed: only souvenir shops seem to be flourishing. The quietness in the galleries foreshadows the fate of the art zone.

A report by Art Market Research Center released in January shows that in 2012, the number of galleries in 798 dropped from 207 to 173, and that it had the biggest fluctuation of any art zone in China.

"I'm not sure about the specific number, but indeed more galleries have pulled out in the past two years than before, including some big ones," Zhu Qi, a curator who frequents the 798 Art Zone, told the Global Times. "It relates to both the current art environment and the galleries' choices."

Rising rent

Among those leaving are Hanmo Art Gallery and Times Space, which fall into the category of "big ones." As one of the oldest galleries in China, Hanmo Art Gallery was established in 1997 and moved to 798 in 2004. Since the gallery consistently pays attention to young artists, it has been reputed as the "DreamWorks of young artists."

Lin Song, director of Hanmo, revealed to Beijing Times that the gallery moved away from 798 directly due to rising rent and the ecological change in the art zone. "The rent rose by five times since 2004, and we find the one-year renting contract unstable and unfavorable for us to make long-term plans," Lin said.

The space Times Space used was taken back by the lease holder of 798 last November due to a dispute about rent and preferential policies. As reported by Beijing Times, Xu Yong, director of Times Space and one initiator of the art zone, said that the rent per square meter rose from 1.5 yuan per day to 3.5 yuan when their contract expired in 2011, which is unacceptable for Times Space given its present situation.

To him, since rent is the biggest expense for a gallery, many cannot bear the increasing cost amid a worsening market for contemporary art.

In response to the complaints about high rent, Chen Tong, who is in charge of the 798 Art Zone's real estate service center, said high rent is partly caused by subleasing. "Many galleries enter the zone by getting places from those who are subleasing instead of signing a contract with us directly," Chen told the Global Times.

He admitted that the rent did rise with time, as the market law regulates, since the real estate company is not a non-profit organization. "But we are trying our best to encourage galleries. There are favorable policies for galleries: the rent for galleries is 1.5-2 times less than that for commercial shops. We hope people can directly contact us for renting."

Changing environment

With rapid development over the past decades, 798 has exploded into a center of Chinese contemporary art. But along with the flood of galleries and workshops also came tourists, cafes and gift shops. The number of shops increased particularly after 2008 when the financial crisis affected the art market.

By far Beijing's most popular art zone, 798 has long been criticized by artists and art institutions for its heavy commercial air. On weekends and holidays, the zone is usually crowded with tourists, who only look at exhibitions, take pictures, drink and eat but seldom buy, making it a scenic spot and free education base for contemporary art.

Lin stressed that the most fundamental reason for Hanmo's withdrawal is the change of environment. "It is getting overly fashion-oriented and restless, which I don't like to see in an art zone," Lin explained, linking the changing of 798 to the whole art market environment in China.

To Zhu Qi, another important reason for the galleries' withdrawal might be that they don't need to rely on galleries to sell artworks any longer and the market for galleries has thus dwindled.

"A large number of artworks are sold on various social occasions based on interpersonal relationships, as opposed to galleries or exhibitions," he told the Global Times, "Galleries that rely less on retail sales consider moving, particularly when rent increases."

Meanwhile, art creation in China seems to have entered a stage of equalization, lacking diversity, causing a decreasing number of good artworks and exhibitions, Zhu said. "The contemporary art is declining while society is fed enough to remain curious about avant-garde art."

Early this year, Arario Gallery, a decades-old gallery from South Korea, declared it would withdraw from Beijing after staying here for seven years, without moving to the 798 Art Zone as planned.

In explaining the reason, Kim Soo-hyun, director of Arario Gallery in Beijing, said, "The art market never recovered from the financial crisis and there is a temporary shortage of excellent young artists while the time for old famous artists has ended."

Another Myeong-dong?

As the most influential art zone displaying contemporary art, 798's important position in contemporary art is probably the main reason for people to worry about its future. Chen told the Global Times that being a commercial and scenic spot is inevitable given its fame, but they prefer galleries over commercial enterprises in choosing the lessees, attempting to curb the commercial trend.

He said they have no specific statistics at present about how many galleries moved out of the art zone last year, though he believed it is less than 34. "While some galleries withdraw, some are coming in as well. I guess it is a shuffling process driven by the market and the galleries' choices."

He added that several big galleries and artists including Goethe-Institute and Cao Yong, a Chinese American artist, will join in this year. "We chose Cao Yong because his style is different from many other artworks in the zone," Chen said, "We are trying to make the galleries more diversified."

But Zhu is not that optimistic. "Galleries flooded into the zone around 2008 when there was sufficient investment. Now, much investment has been withdrawn as the galleries failed to accumulate capital in the first stage, squeezed by auction houses and personal selling," Zhu said.

He added that 798 Art Zone will probably develop into another Myeong-dong area in South Korea, which was originally a zone for galleries and was finally overwhelmed by cafes and shops. "The development of art zones is unsustainable, particularly in a market-oriented environment," he concluded.