It’s a humid night in Shanghai, and I’m sitting in a private club with my host, Colin Chinnery, the new director of the ShContemporary art fair, Sept. 10-13, 2009, which brings 75 dealers from a dozen countries to the neo-classical Shanghai Exhibition Center. Chinnery is happily serving as translator in a conversation between Serpentine Gallery director Hans Ulrich Obrist and the Chinese conceptual artist Xu Zhen. Like many in China, Chinnery wears multiple hats. He’s also an artist who has just opened an installation at Pekin Fine Arts, a Beijing gallery that has a booth at ShContemporary.

Obrist is in town to deliver a talk titled "What is Contemporary Art?", the high point of the VIP lecture series that was organized by e-Flux founder Anton Vidokle. Obrist is also launching his new book, The China Interviews, conversations with 26 Chinese contemporary artists, including Xu Zhen. Xu has been so busy this year that his comments are already out of date.

"Are you Xu Zhen or are you MadeIn?" Obrist is asking, referring to Xu Zhen’s newly formed corporation that now is listed as the creator of his works. Without ever answering the curator’s question, Xu Zhen replies that with his new company, he is able to get much more done. And indeed, Xu Zhen seems uncommonly busy. His Chinese gallery, Shanghart, is presenting a show produced by MadeIn that "reflects a Chinese point of view about the Middle East," and his New York gallery, James Cohan, is currently exhibiting "Lonely Miracle: Middle East Contemporary Art," a faux group show of works by fictional Middle Eastern artists that is actually produced by MadeIn.

MadeIn also has a large-scale installation of five flamboyantly costumed mannequins prancing on top of a grassy hill at the center of the "Discoveries" section of ShContemporary, and is one of the key organizers of "Bourgeiosified Proletariat," an expansive exhibition of new works by over 70 local artists, taking place in three buildings in an empty design complex one hour from Shanghai. Additionally, Xu Zhen’s video from 1998, titled Rainbow and showing the artist’s back turning red as it is slapped by an invisible whip, is featured in "History in the Making: Shanghai 1979-2009," curated by Biljana Ciric, another excellent show in a vacant real estate development here in Shanghai.

It is typical of China that the best shows I’ve seen this week have not taken place in museums, but in the hallways of the fair, at real estate developments and at a tourist site. At ShContemporary, Chinnery is determined to set an example and make "Discoveries" a strong conceptual art show, able to attract top international galleries in a year when few opted to take booths in the exhibitors’ hall. He recruited three curators -- Vidokle, the Mori Art Museum’s Mami Kataoka and Beijing multimedia artist Wang Jianwei -- to assemble the "Discoveries" section, which included works by Joseph Kosuth and Marina Abramovic, Martha Rosler, Japanese artists Shinjin Omaki and Ayiko Mianagi, Anri Sala and Fiona Tan, among others. Many of these artists had not previously shown their work in China.

Coinciding with the fair was the Shanghai eArts festival, an annual event now in its third year and sponsored by the Shanghai municipality, gearing up for a major blow-out next year during the World Expo. This year, eArts Beyond, China’s first retrospective of new media art -- Nam June Paik through Jennifer and Kevin McCoy -- was installed in two floors of the sci-fi-worthy Oriental Pearl TV Tower, the iconic pink skyscraper over in Pudong, curated by part-time New Yorker Zheng Ga. These efforts were a great leap forward for China, where museum shows at the Shanghai Art Museum and the Zendai Museum of Modern Art were disappointing as usual.

"We need to prove ourselves," said Chinnery, who had been chief curator of the Ullens Center for Contemporary Art in Beijing. ShContemporary, produced by the Italian company Bolognafiere SpA, was originally founded by former Art Basel director Lorenzo Rudolf and Swiss art dealer Pierre Huber. After the first year, Huber left in a cloud of controversy, and Rudolf, who was a better manager but failed to attract European collectors, resigned in 2008.

For the 2009 installment, global players like PaceWildenstein, Max Protetch and Jack Tilton, who participated last year, decided not to return. To deal with these problems, the fair chose to reduce the number of participating galleries from 150 to 75 and focus in earnest on attracting Asian buyers. "Dealers did not have confidence in us and had skepticism about the Chinese art market, but it is my job to prove them wrong," said Chinnery, evidently sure of his accomplishment.

"Last year was a complete disaster, poorly organized, so we decided we would not do it again," said Saskia Draxler of Galerie Christian Nagel, who came in 2009 because she, like other dealers in "Discoveries," was offered a small stipend to bring works by Martha Rosler to the fair. She stood beside one of Rosler’s most famous images, the 1966 Cargo Cult, which shows photos of high-fashion models collaged onto shipping containers, now reprinted as wallpaper and priced at $49,000. The gallery had originally intended to show the artist’s more recent series on the war in Iraq, but this plan was nixed by censors due to its Middle Eastern imagery, which could be interpreted as commentary on the unrest by the Uyghurs in western China this spring. All the same, Rosler’s "Body Beautiful" series, on offer for $15,000-25,000 and featuring pictures of naked women cropped from advertisements, attracted plenty of attention in this country where nudity can still cause a certain amount of trouble.

As if to prove this point, Tamas Banovich of New York’s Postmasters Gallery ran into problems with Eva and Franco Mattes’ video projection, Synthetic Performance in Second Life, in which digital avatars reenacted Marina Abramovic’s 1977 Imponderablilia, also on view across the hall. Censors didn’t mind the nudity in the Abramovic performance but complained that the female avatar’s breasts in the digital reenactment were too big and Banovich had to replace video with another Second Life performance of Gilbert and George’s Singing Sculpture.

Upstairs in ShContemporary’s spacious exhibition halls, Asian art galleries made up the bulk of the exhibitors and seemed downright delighted to be free from competing head on with international dealers. Ota Fine Arts from Tokyo sold over $800,000 worth of works by Yayoi Kusama, ranging in price from $200,000 for a pumpkin sculpture to $450,000 for a large painting. "Kusama is well known in China, but mainly through her prints," said dealer Yoriko Tsuroto. "So we decided to bring strong masterpieces to a Chinese audience." Her clients were local Shanghainese as well as collectors from the Philippines. Given that China imposes a 34 percent luxury tax on the sale of art and that Tsuroto did not reduce prices for the fair, these collectors paid well above the market price for these works.

Long March Space from Beijing, which started off as a nonprofit venture but has since evolved into one of the more powerful galleries in China, boasted sales from the moment the fair opened. "We sold a small sculpture by Zhan Wang for $60,000 in the first five minutes," reported gallery deputy director David Tung, who also sold three acrylic wall pieces by a young woman artist named Yu Hong, priced around $30,000. Larger works were on offer too, including a full-scale scholar’s rock fabricated in stainless steel by Zhan Wang for $250,000 and a mural-sized painting of coal miners by Yang Shaobin for $350,000. "No one is buying in that range right now," Tung said.

The Beijing branch of San Gimignano’s Galleria Continua is one of the stronger galleries in China, bravely introducing a program of Western art to a Chinese audience. Its booth featured a new series of carbon drawings by Antony Gormley, priced at $15,000 each, as well as two large sculptures with video monitors playing views of clouds by conceptual artist Gu Dexin, priced at $60,000. "We didn’t think that Gormley would be the taste of Asian buyers," said Beijing gallery director Federica Beltrame, "but we did well with drawings by Hans Op de Beeck this year and discovered that Chinese collectors like drawings."

Likewise, Arthur Solway at the Shanghai branch of James Cohan Gallery was doing well with a series of tapestries by Western contemporary artists, initially commissioned by the British organization Banners of Persuasion. Priced from $50,000 to $100,000, banners by Fred Tomaselli and Kara Walker had sold. "China has a long tradition of paintings on fabric, so these tapestries are a good way to introduce western big names here," said gallery director Leo Xu.

Since this is China, the danger of knock-offs is ever-present, even in the fine art world. One Chinese artist, Yang Zhenzhong, decided to take the issue of plagiarism head-on at the booth of Shanghai’s Shopping Gallery, where images by Matthew Barney, Cindy Sherman, Andres Serrano and Jeff Wall, found on the internet, were reproduced as full-scale works. "Because in China you find a lot of fake products, this is very Chinese in its way and also very ironic because it is so commercial," said a young Italian woman, who was standing in as manager for the gallery, which is basically a collective of young Shanghainese artists.

The suite of fakes even included a famous Chinese work, To Add One Meter to an Anonymous Mountain, a photograph documenting a 1995 performance in which several naked bodies pile one on top of the other to incrementally raise the height of the titular hill. The work is highly controversial in China, because several artists claim authorship, though it is best known and sells for the most when credited to PaceWildenstein artist Zhang Huan. The reproductions in this booth, obviously not originals and with pixels and errors in plain view, were offered for $1,000 to $5,000.

In this more focused fair, local galleries were able to make a bigger splash. Platform China, which specializes in more experimental projects by emerging artists, devoted its booth to a single artist, Jia Aili. In one series of exquisitely done black-and-white paintings, the artist has added Mickey Mouse ears to images from 1950s East European documentary photographs; gallery founder Natalie Sun had sold three for $36,000 each. "Capitalism is reclaiming socialist society," she said with a smile, evidently aware of the parallel to holding an art fair in once-Communist China. "All our American collectors stopped buying this year, but it seems that interest from the Chinese and Southeast Asian buyers is quite good."

Another European dealer with a gallery in Beijing, Michael Schultz, was also getting strong results for some new Chinese artists, selling a landscape by Huang Min to a local real estate company for $84,000, two paintings from the "Peerless Beauty" series by Zou Cao for $35,000 each and a porcelain computer by Ma Jun for $21,000. "Last year, the fair had more international galleries, very high quality but not good for the Chinese domestic market," said Schulz. "Now the fair concentrates on the young Chinese market with lots of Chinese galleries and adjusted price levels and this is good for the domestic market in China."

Schulz and other dealers were happy that fair organizers had made a concerted effort to bring in art buyers with its bureaucratically named "Collectors Development Program," flying in nearly 300 guests and putting them up in the nearby Swissotel. Organizers managed to lure a few European and American collectors to the fair, including Cees Hendrikse from the Netherlands, who has a large collection of Chinese contemporary art, and Dr. Howard Osofsky, a board member of the New Orleans Museum of Art.

But, ShContemporary’s true success was with Asian buyers, many of whom have only just begun to patronize private art galleries. At the gala dinner held for these VIPs, I had the chance to meet Hong Kong attorney Hallam Chow, a partner at White & Chase who has been funding experimental and new media projects in mainland China, Takeo Obayashi, former chairman and CEO of one of Japan’s largest global contractor corporations, and Tseng Wen-Chuan, aka Rudy Tseng, former managing director of the Walt Disney Company in Taiwan. These Asian collectors are the new players in the Asian art market and their names are well known in the East, Asia’s counterparts to Don and Mera Rubell, Aby Rosen and Eli Broad.

"This was our first participation in ShContemporary and we are very pleased," said Meg Maggio, director of Pekin Fine Arts in Beijing. "Much more attention to collector needs and interests went into this year's fair and the result is -- from what I've heard from fellow dealers -- more sales than last year's fair." She had brought to ShContemporary works by Choi Jeong Hwa, the star of Los Angeles County Museum of Art’s recent show of contemporary Korean art, "Your Bright Future."

Arthur Solway, who opened a show of works by American artists Trenton Doyle Hancock, Erick Swenson, and Alison Elizabeth Taylor at James Cohan Shanghai during the fair, was even more positive about the market for western contemporary art in China. "I think things are getting better and better for the gallery and I can definitely say that there are Shanghai collectors, and other Asian collectors, for western work," he said.

The fair was just as interesting for the presence of those who were not participating as those with art on sale. I ran into Leng Lin, president of Pace Beijing, who is about to open a solo show of new works by Zhang Xiaogang, best known in the west for his "Bloodlines" series. According to Leng, the artist has expanded into painting on steel plates as well as making small sculptures, which will be priced around $200,000, substantially less than the $450,000 to $1 million for the canvases recently shown in New York.

Lin is also assisting Yin Xiuzhen with her upcoming show at the Museum of Modern Art, scheduled to open in February. Yin is the wife of artist Song Dong, who recently placed his massive installation of material collected by his late mother, Want Not, in the MoMA atrium. "The number of local buyers is still very small, but even with the economic crisis, they have remained active so the market is not bad here," he explained.

Eric Chang, the director of Asian contemporary art at Christie’s Hong Kong, was also on hand and spoke positively about the art business’ economic prospects. "The young generation of buyers now coming into the market are very smart and have a new perspective on value," he said. "We have a very strong confident feeling about China and the upcoming sales."

But the visitor who may surely have the last laugh was Magnus Renfrew, director of Art HK, the Hong Kong art fair which has had much greater success attracting top galleries like Gagosian and Lisson. Hong Kong is a duty-free zone with a state-of-the art convention center, making it much more suitable for international galleries. Renfrew boasted about the number of galleries that have contacted him about participating in the fair, ShContemporary’s main competitor, next May.

Can China, which also has two art fairs in Beijing, sustain this much activity? "We have a responsibility to support and build up these three very disparate markets," said Meg Maggio of Pekin Fine Arts. "Each fair is a fascinating window on a different local art scene."

BARBARA POLLACK is author of The Wild, WIld East:  An American Art Critic's Adventures in China (Timezone 8 Books).