Please look after our Turners, Mr Wen

The Government has pledged millions to underwrite an exhibition of the artist's work in Beijing

The decision to send more than a hundred paintings by the English Romantic artist J M W Turner to be exhibited in Beijing – after the successful visit of the Terracotta Army to London – was a hugely symbolic move, part of a "wider approach to building understanding between the two countries".

It was supposed to cement Gordon Brown's position as a global statesman, and strengthen his relationship with the nation he sees as the world's most significant rising power. But, only two months later, the Prime Minister's grand gesture is already looking limp – and it could also end up costing the nation hundreds of millions of pounds.

Ministers have been forced to pledge more than half a billion pounds of taxpayers' money to ensure the landmark Turner exhibition could go ahead, after the credit crunch dashed hopes that private investors would foot the bill.

The Foreign Office had to make an emergency request to the Treasury for permission to underwrite the near-priceless collection against loss or damage – and save an exhibition seen as "a critical part of [Britain's] public diplomacy efforts" – when the Chinese made it clear they would not accept any financial responsibility for the paintings.

The rushed deal, put together to allow Mr Brown to announce the move while the Chinese Premier, Wen Jiabao, was visiting the UK for an Anglo-Chinese summit in February, effectively leaves the Government in the position of insurer of last resort. If any of the 112 paintings come to harm during a five-month stay at the National Art Museum of China (NAMOC), ending in August, the taxpayer will pick up the tab.

"The intention was for the cost of the exhibition and its insurance to be covered by private sponsorship," Caroline Flint, the minister for Europe, explained in a letter to the chairman of the Public Accounts Committee, Edward Leigh, earlier this month – several weeks after the paintings left for China.

"Prearranged commercial sponsorship was affected by the economic downturn and although the [British] Council sought replacement it had not been forthcoming."

The exhibition, the result of a partnership between the British Council, Tate Britain and NAMOC, opened in Beijing in April. The huge collection of paintings and works on paper, J M W Turner: Oils and Watercolours, had previously been hosted by the Pushkin Museum, Moscow.

When the Beijing visit was announced, all senior figures connected with the deal made much of its wider political and cultural significance.

Martin Davidson, the chief executive of the British Council, said: "China will be an important economic partner for the UK over the coming years and cultural ties will be vital to maintaining strong links.

"This exhibition forms part of a wider approach to building understanding between the two countries."

However, Ms Flint revealed that the move had been threatened by the fact that organisers had been able to arrange commercial insurance worth only £100m for a collection conservatively valued at more than £650m.

She added: "Before approaching the Treasury to seek agreement to increase contingent liability, all other options were fully explored.

"While there is a government indemnity scheme which covers works of art moved within the UK, it does not cater for an artwork loaned outside the UK. A government-to-government agreement was not possible as the Chinese government indicated that it would not be willing to commit to an agreement which exposed it to any financial liability for this exhibition.

"As there was still a shortfall in funds... the exhibition could only go ahead with the government indemnity scheme providing additional indemnity, which could not be covered by commercial insurance."