Darkness falls on Tiananmen as police play hide-and-seek under Mao's portrait and Beijing's neo-yuppies sip mocha-lattes at Starbucks. Nearby, a gaggle of artists and curious expatriates gather in an underground club to watch art videos. Advertised only a few days earlier by the Mustard Seed Collective (named after a school of traditional Chinese painting), tonight's Beijing happening features two local video artists and a band from Gansu, a dusty province at the edge of the Taklamakan desert.

On a projection screen that usually hosts ESPN and MTV, an extended tape loop plays. It's an artist's submerged face, floating free in a dark pond. He's not drowning, just pensive and detached - almost fetal. The Chinese cultural reference is impossible to mistake: with about 60 to 100 million itinerant workers and peasants, China's floating population (liudong renkou) is the source of much controversy and concern. Not to mention the dubious status of artists themselves, outcasts who impose themselves on China's chaotic, hybrid culture.

The event itself is non-political, but as yet another unsanctioned cultural moment, the organizers never release the location or time more than a few days in advance. A local painter's exhibition, for example, might run three days on an invite-only basis because authorities frequently shut down non-official shows. Art remains a serious threat in China because dissidence has been reduced to a symbolic level: consumer culture and censorship have made political discourse seem distant - or even obsolete.

As I meet a few local artists, it's clear that most don't worry too much about the police. "Too dumb for their own good," says one. "Mostly they don't understand art, so it's hard to convict someone for being abstract."

Indeed, for artists, the more immediate concern is money. Despite the open markets of China's cities, it's nearly impossible to exhibit and sell modern art within China: despite the fact that the government keeps closing local shows, Western collectors are really the only ones who purchase Chinese work anyway - they love anything that features Mao Zedong, McDonald's and/or the Great Proletarian Cultural Revolution. Nevertheless, caught between a police state and an indifferent public, artists have embraced the consumer chaos of post-Deng China with an urgency and originality that has awed critics around the world.

But how do you sell outlaw art to the West from a run-down apartment or concrete studio? You get a Western writer to come visit you. And he'll write about your dissident artwork for some magazine.

This is probably why I'm swiftly ushered into a back room after a few careful inquiries around the club. At home, people will schmooze you in uptown bars and openings. But by the looks of things, we're sitting behind a locked door in the nightclub manager's office: a few chairs, a desk, and a closed-circuit television system that scans parts of the bar, switching every thirty seconds to some ghostly image of an empty hallway, or the back of a bartender's head.

I meet four painters who all hail from the same neighbourhood. Their English is almost as bad as my Chinese. But we agree to meet in two days and I will tour one of two artist settlements that have sprouted up on the outskirts of Beijing. They are all committed full-time artists, some more successful than others. None of them has been invited to the Venice Biennale. And each one has a business card that is much nicer than mine.

The tenth anniversary of the Tiananmen Square massacre arrives and passes, much as any other day does in Beijing. Through smog and gridlock, we struggle to the outskirts of the city and board a series of public buses to the countryside, where 100 million people survive on less than $1US a day.

In between cornfields, mud roads, and hog farms, we locate the converted peasant cottage of Liu Jin, a young painter who recently relocated from the city. On the outside, it looks like just another country brick house with a walled courtyard. But inside, it's Chinese bohemian all the way: behind canvases, a Mao poster peeks over one wall, while a Leonardo DiCaprio and Kate Winslet poster from Titanic looks down on an old record player and an ancient telephone. Everywhere are works-in-progress, magazine clippings from installations and collages, as well as a number of art books that commemorate three-day exhibitions.

Recently, Liu has been painting female body-builders - China just started broadcasting body-building tournaments on television and the mega-morphed Greek bodies of fellow Chinese have many viewers transfixed. As more urban youth struggle with obesity, somehow the arrival of muscle women on Chinese television seems appropriate. "The people have become fat but their thought is thin," explains Liu through his girlfriend, Lian YunGang, a painter who has recently graduated from design school.

Strength and sacrifice were Mao's esteemed values. But now, it's shopping and sales - one wave of propaganda has been closely followed by another. "The character of the communists influenced the advertising form," he says. "This kind of influence of popular advertising can hurt and misguide people to think." On a nearby canvas, a sturdy Red Army soldier in uniform stands with his bride in a flowing, western-style white wedding dress.

Lian pulls out a photo of some of her recent work, a stunning portrait of a modern Chinese raver girl, done in the manner of a traditional painting. But she has no business card or photos to spare.

We stand near a lone rosebush in Liu's courtyard. Pigs squeal nearby and a tractor passes the front gates. She has few illusions about the artist's life of penury in China. Like her boyfriend, there's a quiet sense of mission and mischief in her thoughts, as though they've both arrived at some personal understanding oddly rooted in Mao's guerilla teachings and a Confucian scholar's duty to tell the truth.

Despite the ripe irony that infuses Zhao Bandi's panda and Liu's art farm, there's also something dead serious afoot. Things need to be said. "The artist's thought is active," she says. "The artist's thought is dangerous."