There are an estimated 200 auction houses in mainland China, but not a single salesroom run by international giants Sotheby’s and Christie’s. Come Saturday, that may change.

The market for Chinese artworks is booming both within and outside China. But so far, only Chinese companies (and the government) have been permitted to profit from transactions in Hong Kong, a free port. Starting December 11, China will permit foreign auction houses to set up shop on the mainland.

This change is one of many occurring in China as part of its membership in the World Trade Organization. And for the rest of the auction world, it couldn’t come at a better time. China’s auction market has been gathering steam since the 1990s, when politically connected entrepreneurs (sons and daughters of Communist leaders) began emptying government warehouses, selling Chinese artworks that had been confiscated. In just one decade, these private/government-owned businesses sprung up all over the place. Today, some are major operations. One of the top mainland firms, China Guardian, sold more than $57 million during a four-day auction including Chinese painting, furniture, rare books, porcelain and stamps in November.

Christie’s and Sotheby’s sare keeping an eye on developments, but neither house appears poised to open auction rooms in Shanghai or Beijing. At the moment, the Chinese government still presents many hurdles. New regulations about the auction industry were posted this week on the Chinese Ministry of Commerce Web site. They were unavailable in English but, according to a press officer at the Chinese Embassy in Washington, D.C., Sun Weide, the text included “lots of requirements.”

There is an endless tangle of restrictions on the import and export of Chinese artworks. Auction houses can’t deal in antiques created before 1949 nor some contemporary artwork, for instance. It’s unclear if modern artworks in the classical mode, such as brush painting – one of the hottest areas of the market – will also be disallowed. It seems what can be sold is still up for debate. And in a culture that is very sensitive to cultural patrimony, the Chinese appear to be restricting the foreign houses to categories such as jewelry, cars, and recent artworks.

“For foreign auction houses, it still presents a limited opportunity,” said Christie’s International Business Director for Asian Art, Andy Foster. “Of course Christie’s continues to explore future possibilities on the mainland.”

In spite of the new laws, some longtime dealers say they don’t expect the new rules to impact the market right away. “The Chinese are giving lip service to their obligation under the WTO that they allow competition,” said a New York art dealer of Chinese works, James Lally. Mr. Lally worked at Sotheby’s until 1985 and helped establish the company’s Hong Kong branch. “They are very well set up in Hong Kong and don’t have a tremendous advantage by duplicating operations at this stage.”

So for now both houses are keeping their efforts in Hong Kong, where sale totals have recently surpassed Asian sales in New York and London. Christie’s is doubling its space, moving their sales from the Marriott Hotel to a space in the vast convention center. This comes on the heels of strong fall sales.

The Hong Kong auctions have exploded as the Chinese economy picks up steam and newly wealthy entrepreneurs seek to buy back some of their cultural heritage. Christie’s Hong Kong pulled in a record $63.7 million at art auctions in October, nearly double their sales totals from October 2003. Sotheby’s series of sales totaled $45 million.

Bidding was especially fierce for material that appeals to the conservative Chinese collector – especially anything with an Imperial provenance. A rare, blue and white 15th-century Ming brush-washer brought $3.4 million at Christie’s. Sotheby’s set a record with the sale of a Qianlong famille-rose vase, selling for $5.3 million.

While ancient and classical Chinese art is in great demand, this material may not be the basis of a business when Sotheby’s and Christie’s do decide to enter the market. The safest and easiest selling category is likely to be contemporary art, which is not affected by the stringent cultural protection laws.

Both Sotheby’s and Christie’s tested out this auction market this fall, holding first-time auctions of contemporary Asian painting in Hong Kong. The sales were hugely successful, with more than 94% of lots finding buyers. Christie’s sold more $6.5 million on October 31, with most of the buying done by Asian private collectors. Sotheby’s Chinese contemporary art auction totaled $2.95 million with eight of the top ten lots selling to Asian private collectors.

The market for contemporary Chinese painting appears to have considerable potential. “The market in China is fragmented and rather erratic,” said New York dealer Richard Goedhuis. “It’s still substantial and crackling.”

Mr. Goedhuis sells mainly to Western buyers but believes that once Chinese buyers join the fray, Chinese painting will became the most coveted artwork of the age. He sees an eruption of creativity in China not matched since the invention of modern painting in Paris at the start of the 20th century.

Right now Chinese contemporary painting is still a bargain. Mr Goedhuis ran the numbers and determined the average price for the top 20 international artists is $300,000-$500,000. The very top Chinese paintings are still priced around $30,000. At Art Basel Miami Beach last weekend, there was one lone gallery from mainland China exhibiting. Shangart, a gallery based in Shanghai, hung their small booth with large canvases priced $5,000-30,000 – one of the fair’s few bargains.