These days, a bid of as little as pounds 500 at a London auction can buy a terracotta horse of the Tang dynasty - that's 618-906AD. At that price, it will be unglazed, under a foot high, bashed and heavily restored, but still over 1,000 years old: a decorative and relatively inexpensive talking point.

Tang horses are icons of ancient Chinese art. Canny dealers in Hong Kong and Shanghai were alerted to the West's growing fascination with them when, at the height of the art-market boom in 1989, a Japanese dealer paid a world-record pounds 3,740,000 at Sotheby's for a glazed, magnificently detailed specimen with flared nostrils and open mouth that had been stashed away by the British Rail pension fund.

Soon afterwards, in China, torches flashed in the darkness as countryfolk buried their inhibitions about disturbing ancestral graves and dug up thousands of ancient pottery horses, vessels and metalware, to sell to dealers. The Chinese authorities, short of foreign currency, turned a blind eye.

Today, that world-record horse would fetch only pounds 1m. The market became glutted and prices across the board are down by more than half. The number of affordable Tang horses offered for sale in Hong Kong's antiques Mecca in Hollywood Road is much diminished. Maybe most of them have been dug up. Maybe the authorities are getting tougher. In any case, dealers now find it more profitable to specialise in better-quality horses capable of fetching pounds 5,000 or more in the West.

Now is probably the last chance to pick up cheap, decorative, imported Tang horses and other ancient Chinese items. Chris Martin, a dealer in ancient art who buys only goods that have cleared British customs, is keeping his prices unbeatably low. But some posh West End dealers, exploiting the mystique of antiquity, are charging the earth. Why pay pounds 13,000 for a terracotta stick figure of the Han dynasty - 206BC-9AD - when you can buy one from Guinevere Antiques for pounds 650?

Meanwhile, furniture dealer Steven Shell has developed a new market in 19th-century Chinese domestic furniture and wooden kitchenware. Chinese villagers are discarding it in much the same way as we chucked out good country oak and pine in the Fifties. He imports it by the containerload and sells through retailers at knock-down prices - such as pounds 549 for a wedding cabinet. His range of over 50 items, 60-150 years old, comes from the Northern provinces and Zhejiang and is made of elm, Manchurian ash, Zhishu and Zhamu. Never mind its clean, contemporary look. It used to be unsightly chipped lacquer until Chinese craftsmen stripped, restored and re-finished it.

It's not worth faking 19th-century Chinese furniture. But there is plenty of fake Chinese pottery about: it has lowered confidence in the market - and prices. Don't buy unless the auction catalogue or dealer's warranty says that the age has been confirmed by an independent thermoluminescence test. It may add pounds 180 to the price, but it avoids a lot of heartache.

Steven Shell furniture is at Elephant (0181-563 8480) and Fenwick (0181- 202 8200). Information about other stockists (01722 320120). Chris Martin Ancient Art: The Ancient Art Shop, Windsor Royal Station, Windsor, Berkshire SL4 1PJ. Mail order (0181-882 1509/4359). Guinevere Antiques, 574-580 King's Road, London SW6 2DY (0171-736 2917)

After the boom in the late Eighties and early Nineties, a glut of artefacts led to a fall in prices, which are now down by more than half - but choose your supplier with care. Facing page, from far left: square bronze Hu (vessel) and cover with Taotie (animal mask) and ring handles, 16in high, Han dynasty, 206BC- AD220, pounds 1,600 (Guinevere Antiques); red wedding cabinet made from pine and elm, 68in high, 80-120 years old, pounds 550 depending on decoration (Steven Shell); painted pottery stick figure, Western Han dynasty, 206BC-AD9, 24in high, pounds 650 (Guinevere Antiques)

This page, from top: terracotta heads, 3-4in high, dating from the 2nd century BC - these `servants' were buried with their masters to keep them in the style to which they were accustomed, pounds 170 (Chris Martin Ancient Art); wing dresser from Northern China, 33in high, 85-150 years old, pounds 917 (Steven Shell); moulded and hand-sculpted earthenware warrior, 18in high, from the Han dynasty, 200AD, pounds 695 (Chris Martin Ancient Art); unglazed Tang horse, 20in high, 618-907AD, pounds 1,900 (Guinevere Antiques). Tang horses are the icons of ancient Chinese art - a Japanese dealer paid a world-record pounds 3,740,000 at Sotheby's in 1989 for a glazed, magnificently detailed specimen with flared nostrils and open mouth that had been stashed away by the British Rail pension fund