Zhang Daqian's Peach Blossoms is sold 227 million yuan at a Hong Kong auction. [Photo provided to China Daily]

Strengthen integrity

According to Ji, the Chinese market also has to strengthen its integrity. He said there has been fewer counterfeit antiques at auction in recent years, and fewer swindles in salerooms, some of which use hired shrills who pretend to bid but actually push up prices and mislead other bidders. He added that there are still doubts about the integrity of some sales, especially when they hit top prices.

The market analysis provided by Basel and UBS said Chinese auctions reported an unsold rate of 55 percent; much higher than in 2004, when it was 35 percent, and in other countries－for example, the US market has an unsold rate of 26 percent.

The report explained that the high rate indicates "a continuing problem with fakes in the market", and it is the result of a glut of lower-quality objects and insufficient number of top-quality works with sound sources of origin that are sought by collectors.

McAndrew said most dealers and auction houses in China agree that sourcing high-quality works remains a big challenge, despite demand far outstripping supply.

Chinese auction houses also deal with the recurring issue of late or nonpayment by winning bidders.

The Art Basel and UBS report further revealed that the rate of nonpayment has risen in recent years, with a rise of 5 percent annually from 2013 to 2016.

"To reach international standards, Chinese auctioneers should learn more about how to win the respect of their clients, counterparts and other circles of society, so they can achieve sustainable success," Ji said.

In a statement in the market report, Mark Haefele, global chief investment officer at UBS Wealth Management, said by its nature art will not deliver some of the features crucial to long-term investment propositions, which are more readily found in more-traditional financial assets.

"What art can give us is different, however, and in some ways it is worth more," he said.

"Art offers pleasure, passion, the thrill of a new perspective, and, ultimately, the chance to leave a legacy that goes beyond money."

Bo Leung in London contributed to the story.