Four-inch wax figures climbed a miniature staircase glued onto banister towards a spotlight that gradually melted them, while equally misshapen but life-size human shapes, painted silver and pink, hung out from the gray brick walls. Bricks had been taken from the wall, strewn across the floor, and covered with duster feathers, sections of old wooden flooring had been pried up to create bridges over beds of nails, and a circling toy train pulled glass coffins containing Mao Zedong, Deng Xiaoping, and Elvis.

     "I wanted the exhibit to be something open, casual, natural, with artists freely interacting with the space," explained its curator Yang Hailun. The old warehouse where the underground installation exhibit "In Memorial" was held late November was demolished a few weeks later as part of Shanghai's ambitious urban reconstruction scheme. The independent satellite show's melancholy interaction with the doomed building expressed the "Urban Creation" theme of the 2002 Shanghai Biennale far more eloquently than the official exhibition.

     Its size, government sponsorship, and international status make the Shanghai Biennale one of the most important art events in mainland China. The 2000 Biennale was an exquisite, seamless exhibit that surprised the art world with its professionalism, and a simultaneous spate of shocking satellite shows at independent galleries heightened its impact. The 2002 Shanghai Biennale, which runs until 22 January, built upon its predecessor's success, but the government-friendly theme, extensive private involvement, and its agenda of repackaging modern art for consumption by the Chinese masses dissipated its impact towards broader social questions and away from pure art.

     2002 marks the fourth Shanghai Biennale, but 1996 and 1998 were both small shows, featuring only Chinese artists and limited themes. That changed with the 2000 Biennale and its amorphous but challenging topic of "Shanghai Spirit". As "the first international large-scale exhibition in China," said Li Xu, a director of the Shanghai Art Museum (SAM), which hosts the event, and a curator of the 2000 and 2002 Biennales, "Shanghai Spirit" sprung the city's otherwise elitist modern art scene into the public eye and attracted enthusiasm from around the art world.

     The 2000 Biennale was accompanied by a rash of brash, controversial independent exhibitions held at private galleries during its opening week. The satellite shows by and large showcased installation art, which was then just starting to take the city by storm. Some were whimsically provocative, such as "Ordinary Life", organized by the young video artists whose work it featured, and the two floors of conventional and unconventional art at "Usual/Unusual". Others were more confrontational, particularly "Fuck Off" at Eastlink Gallery. Curated by Ai Weiwei, it featured animal carcasses, raw meat, self-mutilation, and an infamous photograph of an artist eating a human fetus.

     "Fuck Off" was closed by the police after two weeks, but the fall-out from it also threatened the Shanghai Biennale. "Some of the satellite shows in 2000 used the Shanghai Biennale name," complained Li Xu, referring to a photograph in "Fuck Off" by Xu Tan captioned "2000 Shanghai Biennale Welcomes You". "The government misunderstood and thought we had endorsed them. In fact, we also oppose this kind of 'art'."

     Once the Cultural Bureau decided to allow the Biennale's continuation, it also decided to fully support the event. The city government ensured enthusiastic promotion in the state-run media, attracting "the best coverage ever of a visual art event in China," said Li Xu, and Vice Mayor Zhou Muyao attended the opening. Two million of the 2002 Biennale's 7.8 million RMB budget - an increase from the 5 million RMB two years ago, but still a tenth of most international Biennale budgets - was provided by the government.

     The remainder came from private companies, including Three On The Bund (OTB), which joined SAM as an official organizer. An upscale art and entertainment complex to be located on Shanghai's historic waterfront, OTB is owned by Chinese-American Handel Lee, who is also behind Beijing's Courtyard Gallery and Restaurant. Its involvement in the 2002 Shanghai Biennale began with a 2001 exhibition curated by Weng Ling of the Central Academy of Art and shown at SAM. Ms. Weng, who will direct OTB's gallery space, then discovered that SAM director Li Xiangyang independently shared her long-held vision of an exhibition devoted to art and architecture, very timely given the break-neck pace of Chinese development, and the "Urban Creation" topic was born.

     Li Xu explained the rational behind the topic. "In China, architects are not considered artists. Chinese art schools have no architectural department; and architectural schools no art component. We hope this Shanghai Biennale will make the city government and developers understand that architecture is an art, and will raise their interest in artistic factors."

     OTB's involvement marked the largest private participation in a governmental Chinese art event. Privatization also shifted the Biennale's vision into something more mainstream, less avant-garde. "As a private company, you think more about what art is meaningful and interesting for more people, not just for the art field," stated Weng Ling. "I think art must communicate with the mainstream. It's good for art." She sees the Biennale as a way to popularize modern art in China. "China now has a lot of private galleries, but they do not do a great job of developing and helping contemporary art and artists. I think the best art should be shown publicly, not underground."

     However, the move towards the mainstream attracted criticism of the exhibition's apparent commercialism. No artists or curators were willing to comment on the record, given the tight nature of Chinese art circles, but there was a general disappointment that this Biennale lacked 2000's oomph. Many criticized the architectural aspect, mostly displayed as self-promotional photographs and models by participating design firms, as "boring". It also suffered from comparison to the concurrent Guangzhou Triennale, which, with its exclusive focus on contemporary Chinese art, catered more to the interests of visiting critics and curators.

     "The show's success can be seen in the art works that address architecture," said Li Xu. "and the architects took a more artistic bent, such as the bicycle furniture by [Japanese design firm] Atelier Bow-Wow." The bicycle furniture, with teapot and snacks set out for visitors, was also one of the many interactive works that he stressed as making the 2002 Biennale "not just for art experts, rather more accessible, more entertaining," although overly zealous museum guards inhibited full enjoyment. "Also," Li Xu added, "we had the historically strongest curatorial group, with big names like Fan Di'an and Alanna Heiss," director of New York's PS1.

     Many observers also felt that 2002's satellite shows also fell short of 2000's precedent. "In 2000, there was excitement over the first international exhibition," explains Lorenz Helbing of private gallery ShanghArt. "This time, the novelty had worn off, and there's a general opinion that it's not so needed, the artists feel less excluded from the official event." This year, only "In Memorial" was provocatively topical, addressing the controversial raising of historic neighborhoods, an issue ignored by the official Biennale's rosy pro-development vision. "When it Rains, it Pours" at ddm Warehouse managed some shock but little continuing buzz with performance art. The subversive edge of "Fanmingzheng/Fanmingzhu", featuring prominent Shanghai installation artists Liang Yue, Xu Zhen, Yang Zhenzhong and Yang Fudong, was blunted by fact that the latter two also had works in the official exhibition.

     The museum had advertised that the Shanghai Biennale was trademarked, and any outside exhibitions using its name or logo would be sued. Meanwhile, rumors circulated that independent shows concurrent with the Biennale would be closed down. "Sure, there were rumors that shows were more watched this year, but that didn't stop anyone, it just made them more secretive," said Li Liang, who organized "Fuck Off" in 2000 but just held a photography exhibition during this Biennale week. He felt that 2002's satellite shows were not less daring, but rather that, "the first time, people were surprised; this time they expect it."

     Li Xu recounted how one artist had showed up outside the museum on the opening day of this Biennale displaying a sign, in English and Chinese, "No dogs or foreigners allowed." Although he was promptly arrested, he illustrates the growing divide between the audaciously experimental but marginal international attention-seeking theatrics of China's private avant-garde and the professional, smooth but sometimes staid nature of the contemporary art palatable to the public and the Communist Cultural Bureau.