Charles Saatchi's inaugural exhibition at his new gallery in Chelsea, The Revolution Continues, is the most persuasive showing of contemporary Chinese art yet mounted in this country and also the best, most coherent display of work from his own collection since Sensation in 1997.

Gone are the bombast and the fumbling that marked his reign at County Hall with its passé shows of European painting, and the subsequent uncertain foray into American art at Burlington Gardens. Here, at the 70,000 sq ft Duke of York's HQ, the Medici of the King's Road rules a state-of-the-art building that is, in its ample, clean design, sensitive lighting, gorgeous floors and airy elegance, an example of a private museum grand and serious enough to compete with national institutions.

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Saatchi's collection of Chinese art is one that Tate would kill for, and could not begin to afford. Immediately arresting are Zhang Huan's kinetic sculpture of a donkey raping a model of Shanghai's symbolic skyscraper, the Jin Mao ("Golden Prosperity") Tower; Shen Shaomin's genetically modified metre-high skeletal mosquito delicately carved out of bone; and Bai Yiluo's "Civilization", classical terracotta busts of emperors and slaves pierced with deathly pitchforks, a monument to culture built on the blood of millions of anonymous labourers. The buzz and sparkling variety, despite the uncompromising political content, throw into bitter relief Tate's current deadly Turner Prize exhibition. Saatchi is an indefatigable apologist for the new, and he makes the conceptual work here, though often simplistic and depending on instant impact, as lively and fresh-yet-dark as his Young British Art show a decade ago.

Sensation, of course, is this former ad-man's thing. Of course, there are weak and repetitive sections here, and work that is already well known, but he has choreographed the exhibition thoughtfully within a birth-to-death arc, framing it by two large, menacingly grotesque installations that show off his new premises to stunning effect. On the lower ground floor is Death: Sun Yuan and Peng Yu's "Old Person's Home" (2007) consists of 13 life-size, intensely lifelike sculptures of decrepit old men - a bearded, toothless, withered crowd in smart suits and uniforms, a dumb army general, a naval commander, a couple of sheikhs, an orthodox priest toppled over his gold crucifix - depicted as disintegrating world leaders. Propped into electric wheelchairs, they squeak around in a geriatric game of dodgems, crashing into each other and the discomforted viewer. I loved the snail's-pace anarchy, ghastly detail - dribbling lips, fly-pocked skin - and parody of international conflict. And, at last, here is memorable Chinese art that does not turn exclusively on national themes.

Occupying the double-height mezzanine at the top of the gallery, Zhang Dali's celebrated "Chinese Offspring" has, by contrast, become emblematic of Chinese history: the 15 resin and fibreglass naked, blotchy figures suspended by their feet from the ceiling, each tattooed with an edition number, reference the vast vulnerable underclass of migrant workers now constructing modern China. Zhang began his career spraying and carving heads into the walls of buildings scheduled for destruction. This piece hangs sparely between canvases by two pioneering painters whose work is also iconic of the post-Tiananmen Square generation: Yue Minjun's hysterical, many-toothed grinning figures, high points of China's post-pop, acid-hued "cynical realism" movement, and Wang Guangyi's "Materialist's Art", painted in the primary colours, harsh lines and thrusting style of the socialist propaganda posters with which his "Great Criticism" series mocks/embraces capitalist branding and decadence.

Both are recent versions of extremely familiar works by Yue and Wang, and look like trademarks: Saatchi came to Chinese art too late to get many of the plum sound-and-fury pieces from the 1990s. He needs them, however, for a full narrative of post-1989 Chinese history, and he has managed a handful of seminal works from this period, including Zhang Xiaogang's chilly photo-realist individual-as-collective paintings - among them "A Big Family" and "My Dream: Little General" - which span 1995 to 2006; and a six-metre woodblock and fabric scroll from 1999 that shows Fang Lijun's classic yawning skinhead, another defining image from this decade.

But it is in work from the past few years that Saatchi's collection excels, and here his examples illuminate intriguingly the current move to a more subtle tenor. The first work you see as you enter, Liu Wei's "Love It! Bite It!" (2005-2007), is a wobbling, rakish, miniature city of western architectural highlights - including warped columns, cornices, domes and spirals, from the Colosseum to the Guggenheim - constructed entirely from edible dog chews. It is mesmerising for its mood of nostalgia as well as for its craftsmanship, sense of unease and satire on consumption. It shares a room with 35-year-old Li Songsong's grey and cream painting-as-sculpture "Cuban Sugar" (2006), four metres of overlapping aluminium panels incompletely nailed together, depicting in images which cohere, then dissolve into fragments, the emergency United Nations meeting held during the 1962 Cuban Missile Crisis: a lush, textural masterpiece of instability and panic.

Last spring, this impressive work was the highlight of Frank Cohen's Chinese show in Wolverhampton. Saatchi has other Li paintings of political history and mass psychology, but this is the finest; that he persuaded Cohen to part with it suggests a commitment to amassing an outstanding collection from these years.

The same quality mark holds in gallery two, featuring Zhang Huan's monolithic "Ash Head" and theatrical ash paintings, made from remains of incense sticks burned in Shanghai temples to create thick scorched surfaces, varying from powdery dust to coarse flakes. These were launched to acclaim and wonder last autumn at Haunch of Venison. Now hanging on Saatchi's walls is the most haunting - the four-metre "Seeds", depicting a massive workers' farm as a ghostly apocalyptic landscape etched in the collective memory, constructed from the very stuff of people's prayers and dreams.

In an essential catalogue, Shanghai curator Jiang Jiehong argues that Mao's dictum "to rebel is justified" is written into every piece here, his legacy providing "a young generation of artists with layers of visual complexity derived from reflection, reinterpretation and redefinition, and with a hunger for radical change ... His spirit of rebellion has continued in a subversive form of creativity that distinguishes the new Chinese art". That The Revolution Continues should triumph in western Europe's newest, most triumphal museum built on private enterprise is a delightful and timely ironic touch.

'The Revolution Continues: New Art from China', Saatchi Gallery, London SW3, to January 18.www.saatchi-gallery.co.uk

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Going going gone ... to the RussiansBy Georgina Adam

Phillips de Pury, the niche auction house that specialises in contemporary art and design, has been sold to Mercury, a Russian luxury-goods conglomerate. The surprise announcement was made just two days before the long-awaited reopening in London of the Saatchi Gallery, which is being operated "in partnership with Phillips de Pury". Under the terms of this partnership, Phillips de Pury sponsors free public entrance to the Saatchi Gallery, with the result that this will now, effectively, be underwritten by the Russians.

No financial details have been released about the deal, which - according to Phillips de Pury - has been a year in the making. It is believed the auction house carries some debt, which is included in the sale. The current situation in the world markets means that some auction houses have suffered from clients delaying payments. Phillips has been investing heavily, however, opening a large new saleroom in London's Victoria as well as offices in Berlin, Munich, Paris, Geneva and Cologne.

The firm "has been looking for a buyer for some time", according to Yves Bouvier, organiser of the Moscow Fine Art Fair, at which Mercury has been an exhibitor for four years. Mercury is Russia's largest luxury-goods company, selling watches, fashion and jewellery. "Nothing will change in our arrangement with the Saatchi Gallery, it's business as usual," Simon de Pury told me. Asked if the firm would now be organising auctions in Moscow, he said, "We're not ruling it out. Moscow is becoming more and more important as an art centre."