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To Smuggle Antiquities Out of China, Traders Make Them Look Cheap

Every year, millions of dollars worth of ancient Chinese objects undergo a mysterious transformation. Jades, porcelain vases, and classical paintings depart the country with one set of export valuations declared to Chinese authorities. The antiques arrive in the U.S. worth at least twice as much on average based on declared import values.

Alice Lovell Rossiter, who crunched those numbers for her master’s thesis at the Sotheby’s Institute of Art, says she’s found a reason for the transoceanic jump: widespread circumvention of Chinese laws meant to restrict export of high-value cultural property. “Objects over 100 years of age are misclassified in order to avoid scrutiny by Chinese export officials, then reclassified properly when brought to the United States,” Rossiter writes in her thesis. “I found that smuggling of cultural heritage items is rampant.”

The sums involved underscore the tremendous size of the trade in Chinese objects more than a century old. For the period Rossiter examined, from 2000 through 2012, the gap between the declared values totaled nearly $1.4 billion. “Due to China’s rich cultural history and the vast amount of antiques and objects that accompany this history, China is considered one of the premier ‘source’ countries in the world,” she writes in the thesis. (Her findings were earlier reported in the Art Newspaper.)

Rossiter, a 2012 graduate of the University of Pennsylvania with a major in visual studies, did the China research as part of Sotheby’s program in art business. Her thesis adviser was Benjamin Mandel, an economist at Citigroup who formerly worked at the Federal Reserve Bank of New York.

The data she used come from the United Nations Commodity Trade Statistics Database, known as Comtrade. To ensure she got the full picture of China’s art exports, Rossiter also included Hong Kong’s reexports to the U.S. She found that evasion tactics have evolved over time. Starting in 2011, Rossiter says, exporters suddenly began to mislabel packages with alternate shipping codes to avoid border controls.

Exports are only half the story. As China’s rich have transformed the country into a top international art market, import data can also reveal misdeeds. When art comes into China, its value is generally underreported: “Because import tax on fine art is so high in China, tax avoidance is a substantial explanation,” she writes. “[A] money-laundering scheme is created through purchasing art outside of China, then shipping the object marked with a low value back into the country. Then the object is either held as a store of value or sold for cash within China’s borders.”

Silver is a reporter for Bloomberg News in Rome, and author of The Lost Chalice: The Real-Life Chase for One of the World's Rarest Masterpieces (HarperCollins). Follow him on Twitter @vtsilver.

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