Sensing that China’s red-hot real estate market may be reaching its peak and disappointed by a slumping stock exchange, Chinese speculators have found a new vehicle for doubling their money fast: mung beans.
The prices of these humble vegetables have skyrocketed at market stalls since the beginning of the year. Mung beans are three times more expensive than in January; garlic is up 20 fold as speculators and wholesalers corner the market.
“A number of people have become millionaires like this” says Zheng Fengtian, an expert on agricultural economics at Beijing’s Renmin University, who has closely monitored recent fluctuations in the price of vegetables.
Cornering the market in mung beans (small, green ovals) may not hold the glamour of cornering the silver market, but it is a lot easier. Like garlic, mung beans are grown in only a few places in China, giving local wholesalers a strong grip on distribution, and they are also easily stored while the market climbs.
The mung bean market rise may bring to mind the famous Dutch tulip mania of 1636-37, when speculation pushed the flower prices to astronomical levels. It's the classic tale of a speculative bubble. So far, mung bean speculation is not widespread here.
But a salesman named Zhang Wuben is doing his part in spreading the word. Zhang Wuben's TV lectures on the healthful properties of mung bean water have become enormously popular nationwide in the past three months. His claims to be a qualified nutritionist have been debunked by investigative journalists, but thousands of Chinese are believed to be following his advice to boil three pounds of mung beans a day and drink the resulting broth instead of water in order to ward off everything from lung cancer to high blood pressure.
“Zhang Wuben might be at the root of this, but when wholesalers saw an opportunity they began to hoard and speculate” says Prof. Zheng. “Then investors started giving money to wholesalers so they could store ten times as many beans as they would have done.”
“Investors are targeting easily stored farm products such as garlic as high-performing assets” a top official from the government’s top economic planning agency, the National Development and Reform Commission (NDRC), told the Economic Information Daily this week.
On Tuesday the NDRC ordered regulators to crack down on the manipulation of vegetable prices. It said in a statement that “price stability is critical to overall development.”