An old Chinese saying goes something like this: Not even the most exquisite piece of art is worth more than a bowl of rice in times of crisis.

Of course, the financial crisis sweeping through a good part of the world hasn't brought famine and pestilence in its wake, but it has sure brought a chill to the once buoyant Chinese contemporary art market.

Even on a sunny spring day, you can feel the chill walking down the empty lanes of Beijing's 798 district, a sprawling factory complex that has been converted into an enclave of art galleries, painters' workshops and exhibition halls. There, the abundance of eye-catching signs in many different colors and sizes that advertise spaces for lease practically diverts from the display of art behind shop windows.

The exhibition halls are closed, their bulletin boards, empty. The only noise comes from the howling of an occasional gusty draught, common during the Beijing Spring, that moves a few old flyers of past events lazily through the air, reminding passersby of better times not too long ago.

Before the global credit squeeze hit Chinese shores in late 2008, Beijing 798 was a bustling market of modern Chinese art, especially paintings, where art dealers, collectors and punters from around the country congregated to buy and sell paintings by well-known masters and budding new talent.

The biggest buyers were Chinese enterprises that tried to outdo each other in sponsoring arts and culture during boom times.

The bursting of the asset bubble last year and the sharp decline in export growth has torpedoed the Chinese art market. Demand dried up as corporations, big and small, cut costs. Some cash-strapped manufacturing companies in the industrial regions even started quietly disposing off at least a part of their collections to raise money.

The plight of Beijing 798 tells only part of the story. In the art markets at M50 in Shanghai and Shamian in Guangzhou, there has been a wave of gallery closures as sales tumbled. Dealers said they did not expect to see a lift-up in the art market anytime soon.

"Our business usually lags the economy by six to 12 months," an art dealer in Shanghai said. For him and other dealers around the nation, "Spring will come no sooner than the third quarter of this year", he said.

In Beijing 798, more than 60 of the nearly 200 galleries there went bust by the end of last year. Those remaining in business were heavily discounting their stock to lure buyers, something none of them has ever done before.

In the 50-sq-m Fanshiondo Gallery in the district, an oil painting of lotus flowers by Lian Zhixiong, 38, is on sale for 5,800 yuan, down from its original 7,800 yuan. What is more, the frame comes free. Despite the discounts, galleries have a problem selling their wares.

"We used to sell an average of 10 works of art for around 10,000 yuan everyday," said Fanshiondo's operator Tian Xingwei. "Now, we are lucky if we sell one or two a day," he lamented, although his gallery was doing slightly better than others in the art district.

To minimize capital commitment and risks, many galleries have changed their practice of paying artists upfront to a consignment arrangement, although the commission income is usually less than what they can make by reselling items they acquire.

Some galleries have tried to supplement their income by branching into the home and office decoration business. "The decoration segment is better than pure art now," said Tian. "Although it is not our main line of business, we can at least stay in business," he said.

Cui Liqing, exhibition supervisor of Jiulifang (Nine Cube) Art Museum, is facing equally hard times. The gallery moved into 798 early last year and experienced a short period of brisk business before falling into a trough.

Jiulifang focuses on contemporary art promotion, targeting high-end collectors. "We are the first batch (of businesses) that are feeling the effects of the global financial tsunami," Cui said. "It is understandable, paintings are something people buy when they have plenty of spare cash, and the first to be let go when the money is tight," Cui said.

The gallery has sunk into the red now. Its survival now depends entirely on the largesse of the owner, who still has other businesses that are making money.

Jiulifang has changed its style and is exhibiting some traditional photos at its 80-plus-sq-m showroom currently. "We are doing some kind of art education work to the public in a bid to cultivate potential customers," said Cui.

To Cui, and her boss, operating a gallery is some kind of a social mission. "We must persevere," she said. "People will recognize our value in time," she said.

Indeed, they do. Independent art critics Zhu Qi indicated that the art business develops in parallel with social and economic growth. Given that metric, China's art sector is rather promising.

Art auction transaction volume, the art market barometer, witnessed a boom in China since the new century, with year-on-year growth of between 20 and 30 percent, according to global art information website artprice.com.

The nation's art auction transaction volume amounted to 23.64 billion yuan in 2007, up 41 percent from the previous year. During the first half of 2008, the figure reached 11.58 billion yuan, making China the world's third largest art auction marketplace after the UK and the US, with a market share of 8 percent.

Mila Bollansee came to China two years ago and settled down to run Beyond Art Space in 798. Now, the Belgian is busy preparing for the 'Beyond the Globalization' contemporary art exhibition to be launched on April 12.

The gallery manager admitted that the situation was "tough", as collectors were not buying as much as before, but said Beyond Art Space would continue to do high quality shows.

"We didn't reduce our marketing budget and are planning to participate at the best art fairs in the future," Bollansee told China Daily.

"I think China will recover because it has a very powerful economy. Other countries may suffer more," said Bollansee, adding that it was a good opportunity to buy high-quality works now because it came at a reasonable price.

The 2009 China International Gallery Exposition, to be held from April 16 to 19 in Beijing, has lured 84 galleries, compared to the 80 last year. Seventy-five percent of the 84 are overseas players.

According to Wang Yihan, art supervisor of the gallery exposition, the participants are seeking potential Chinese artists and collectors.

In spite of a sluggish market, a group of investors have bet on the contemporary art market here. They have launched galleries in Beijing and Shanghai. Water and Wood Modern Art Space was opened last summer in 798. Ji Dawei, supervisor of the gallery, said that the gallery does not expect to benefit in the short term, pointing out that a loss over three to five years was acceptable.

Han Yuqi, president of Urban Culture Research Center, which is affiliated to the Shanghai Institute of Technology, said given the relatively low cost of infrastructure, facilities and the collection range it might be a smart idea to start a gallery now.

"Cultivating artists and collectors take time. Galleries are not quick ways to make money," Han pointed out.

Both Cui of Jiulifang and Bollansee of Beyond Art Space said that the market downturn would result in consolidation of the contemporary art segment, which had been overheated during the past few years.

Art critic Zhu said he believed those galleries and artists who earned money through media hype would be eliminated, as people have become rational and cool-headed during the economic slowdown.

"It's time to separate the wheat from the chaff, and I am referring both to contemporary artists as well as gallery operators," Zhu said.

Most gallery operators are hit by the wait-and-watch attitude of collectors, who worry about the potential of the art scene in the near future.

"Some people purchase art as a hobby, and some consider it as an investment. But art itself is eternal," said Bollansee.