Great leap forward, The Guardian

Ten years ago, Xu Zhen was the archetypal garret-dwelling artist, scraping a living in a Shanghai apartment with barely room to swing a cat. To prove the point, he found a cat and swung it. The artist claims that the animal was already dead when he made the 45-minute performance video, which shows feline entrails being spattered across the walls. But the piece established Zhen as the rising star of the new generation of Chinese artists whose work now features in The Real Thing, an exhibition at Tate Liverpool that is the most comprehensive show of contemporary Chinese art ever staged in this country. The Liverpool show opens at the same time that a group of Young British Artists make their first appearance in China. Aftershock: Contemporary British Art 1990-2006 brings items such as Tracey Emin's bed and the Chapman Brothers' Stephen Hawking statue to the Capital Museum in Beijing. But while these pieces have a retrospective feel, China arguably has the most vital, imaginative and uncontainable art scene in the world today.

Xu Zhen and his peers represent a new wave of firebrands set to make the Tate Liverpool show go off, quite literally, with a bang. Tomorrow evening, the exhibition launches with an explosive piece by the Yangjiang Group entitled If I Knew the Danger Ahead I'd Have Stayed Well Clear. The work takes the form of a massive firework battle worth £50,000.

If the YBAs are set to be supplanted by YCAs in terms of talent and notoriety, Xu Zhen is arguably the Chinese Damien Hirst. In June 2006 he organised a warehouse show of 30 young artists in Shanghai, of which the centrepiece was a video of a panda being masturbated for artificial insemination. The show was forced to close on its opening night.

It is, however, now quite difficult to provoke the authorities into closing an exhibition, as the Chinese government seeks to co-opt contemporary art to advertise the productivity and tolerance of the new China. In 2006, the Shanghai Biennale became the first major state-sponsored exhibition of contemporary art - even the fringe show, entitled Fuck Off, was left to run unimpeded. The Beijing exhibition of Young British Artists is another example of this eagerness to embrace international influences.

The U-turn in the official attitude can be gauged by the fate of Beijing's avant-garde in the wake of the Tiananmen Square demonstrations in 1989, when Beijing's radical artists relocated to an area beyond the city's third ring road, known as the East Village. With no money or conventional outlets for their work, the artists began to conduct increasingly extreme experiments on themselves. One, Zang Huan, covered himself in fish paste and honey and sat for several hours in a public toilet in 100-degree heat. The piece - a comment on the fate of the poet Ai Qing, who was forced to clean toilets during the Cultural Revolution - provoked the police to raid the East Village and evict its inhabitants. In 2001, the area was bulldozed to make way for a public park.

A new artistic community sprang up in the north-east of the city at Dashanzi, centred on a former machine tool plant known as Factory 798. This time, the government sanctioned the area as a cultural quarter, opening up a flood of international investment. Today, Dashanzi is a hub of international galleries, plush apartments and restaurants, with few practising artists left.

The official acceptance of the avant garde is a paradox for Chinese artists. Beijing-based critic and curator Pi Li identifies the emergence of "a kind of official, harmless contemporary art" which leaves artists in danger of losing their identity. "Their position had been the underground. Now they are widely shown and can sell their work very successfully. This has not brought about a good situation for Chinese art; on the contrary, it made the art lose its energy."

Works by Chinese artists have recently changed hands for as much as $1.5m - the amount paid recently by Charles Saatchi for a painting by Zhang Xiaogang - but The Real Thing's curator, Simon Groom, hopes the exhibition will re-establish Chinese art's radical edge. He has taken the bold, possibly even foolhardy, step of inviting Xu Zhen to collaborate in the selection process. "Some of his initial suggestions were a little unworkable," Groom says. "He proposed that we kidnap a drunk, lock him in the gallery and witness his reactions when he wakes up." Zhen also suggested handing out knives to exhibition visitors. One piece that did make the display is the tip of Mount Everest, lopped off by the artist during an expedition to the mountain and mounted in a glass case.

The Liverpool show also features a mammoth engineering project by Ai Weiwei, now China's best-known artist. Ai Weiwei recently collaborated with architects Herzog and de Meuron on the innovative "bird's nest" design of Beijing's Olympic Stadium. For Liverpool, he has created a soaring, illuminated spiral floating outside the Tate in the Albert Dock. "It's the kind of piece that could only be realised in China, where material and labour costs are low," says Groom. "But you cannot underestimate the speed of change in China. Young Chinese artists are less interested in politics than their own dreams and desires. That has never happened in China before, where art had always been a response to the state."

Groom still doesn't know if Zhen plans to attend. "In some ways, I'm rather hoping he doesn't. He's more likely to show up in disguise, or try to sabotage the show in some way. He might even try to close it down." That could be seen as the ultimate irony - once, the Chinese authorities used to shut down exhibitions. These days, the artists do it themselves.