SHANGHAI – After the peppered beef carpaccio and before the pan-fried sea bass there were raucous toasts and the clinking of wine glasses in a room of New Heights, a jazzy restaurant in this city』s most luxurious location, overlooking the Bund.

Wang Guangyi, one of China』s pioneering contemporary artists, was there. So were Zhang Xiaogang, Fang Lijun, Yue Minjun, Zeng Fanzhi and 20other well-known Chinese artists and their guests, many of whom had been flown in from Beijing to celebrate the opening of a solo exhibition of new works by Zeng Hao, another rising star in China』s bubbly art scene.

「We』ve had opening dinners before,」 said the Shanghai artist Zhou Tiehai, 「but noting quite like this until very recently.」

The dinner, held on a recent Saturday night in a restaurant located on the top floor of a historic building that also houses the Shanghai Galley of Art, was symbolic of the soaring fortunes of Chinese contemporary art.

In 2006 Sotheby』s and Christie』s, the world』s biggest auction house, sold $190 million worth of Asian contemporary art, most of it Chinese, in a series of record-breaking auctions in New York, London and Hong Kong. In 2004 the two houses combined sold $22 million in Asian contemporary art.

The climax came at a Beijing auction in November when a painting by Liu Xiaodong, 43, sold to a Chinese entrepreneur for $2.7 million, the highest price ever paid for a piece by Chinese artist who began working after 1979, when loosened economic restrictions spurred a resurgence in contemporary art. That price put Mr. Liu in the company of the few living artists, including Damien Hirst and Jeff Koons, whose work has sold for $2million or more at auction.

With auction prices soaring, hundreds of new studios, galleries and private art museums are opening in big cities like Beijing and Shanghai. Western galleries, especially in Europe, are rushing to sign up unknown painters; artists a year out of college are selling photographic works for as much as $10,000 each; well-known painters have yearlong waiting lists; and the Solomon R. Guggenheim Museum and the Pompidou Center in Paris are considering opening branches in China.

「What is happening in China is what happened in Europe at the beginning of the 20th century,」said Michael Goedhuis, a collector and art dealer specializing in Asian contemporary art who has galleries in London and New York. 「New ground is being broken. There』s a revolution under way.」

But the auction frenzy has also sparked debate here about whether sales are artificially inflating prices.
But the boom in Chinese contemporary art has also brought greater recognition to a group of experimental artists who grew up during China』s brutal Cultural Revolution (1966-1976).

After the 1989 government crackdown in Tiananmen Square, avant-garde art was often banned from being shown here because it was deemed hostile or anti-authoritarian. Through the 1990s many artists struggled to earn a living.
That has all changed. Wang Guangyi, best-known for his Great Criticism series of Cultural Revolution-style paintings emblazoned with the names of popular Western brands, like Coke, Swatch, and Gucci, drives a Jaguar and owns a large luxury villa on the outskirts of Beijing.

More than any other Chinese artist, Zhang Xiaogang, 48, with his huge paintings depicting family photographs taken during the Cultural Revolution, has captured the imagination of international collectors. According to Artnet.com, which tracks auction prices, 16 of Mr. Zhang』s works have sold for$500.000 or more during the past two years.

Lorenz Helbling, director of the ShanghART Gallery here, said that talk about the market being overrun by commercialism is exaggerated. 「Things are much better than they were 10years ago,」 he said. 「Back then many artists were commissioned to simply paint dozens of paintings for a gallery owner, who went out and sold those works. Now these artists are thinking more deeply about their work because they』re finally getting the recognition they deserve.」