Tea in China costs six times as much as goldBy David Eimer in Beijing, Sunday TelegraphLast Updated: 12:34am BST 24/06/2007
China's stock market may be booming and its house prices soaring, but the hottest investment in the country today comes in the shape of a small, compressed cake that smells vaguely earthy and is wrapped in paper.
Pu'er tea, a strong, aromatic brew from the remote south-western province of Yunnan, has long been prized in China for its medicinal qualities. Now, instead of drinking it, millions of Chinese are hoarding it after the price jumped 50 per cent last year.
Like fine wine, Pu'er tea is considered to improve as it ages. In 2005, 500g of 64-year-old Pu'er tea sold at auction for one million yuan (£66,300) - making it six times more expensive than gold.
The price has been rising since 2003, when investors in southern China and Hong Kong realised that, with a limited amount of tea grown each year, they could drive up its price by storing the tea rather than selling it.
Three weeks ago, an earthquake measuring 6.4 on the Richter scale hit the Pu'er tea-growing region, prompting fears of a shortage and causing a sharp increase in the price of the most recently produced tea - which, because of the lengthy fermentation process, might have been harvested up to two years ago.
At the Maliandao Tea Market in south-west Beijing, Pu'er is sold in 350g cakes which the vendors handle as gingerly as if they were rare antiques.
"The price of new tea has gone up 30 to 50 per cent since the earthquake," said Liu Na of the Che Yun Shan Tea Company.
A cake of two-year-old Ye Sheng Gucha tea costs 260 yuan (about £18), while the 13-year-old tea sells for 1,800 yuan. "It'll double in price in two years," said Mrs Liu.
Such returns are irresistible to a people in the grip of a speculating frenzy. Traditionally, the Chinese are savers, not spenders. But in April and May savings declined for the first time in four years, according to the People's Bank of China, as people sought to cash in on the stock and property markets.
Pu'er tea is seen by some as an even more attractive option.
"You don't have to pay tax when you sell your Pu'er tea," said Mrs Liu.
The red-coloured tea has a distinctive taste, much stronger than green tea. In the Huangshan Feng Tea Shop, the owner, Zhang Sheng Qin, held up a glass and swirled it around. "Good Pu'er tea should be transparent," she said.
"It's good for people who want to lose weight," she added. "Are there a lot of fat people in England? Maybe we can do some business."
But then, earlier reporting from China Daily
Improves as it ages? Thank goodness, as I still have pu'er tea bought nine years ago in Shanghai.
Price of Pu'er to 'remain stable'By Jonathan Yeung (China Daily)
Updated: 2007-06-08 06:46
Pu'er tea is unlikely to see a dramatic price increase as a result of damage to factories by an earthquake in Ning'er, Yunnan Province, according to market watchers.
"It's likely that the sale of Pu'er tea will be affected by the earthquake, which has devastated its largest trading market and a dozen major companies producing and selling tea there," Zou Jiaju, secretary-general of the Yunnan tea association, said.
"But whether the tea price will rise dramatically again is uncertain at the moment given that the overall price of Pu'er tea actually dipped in May.
"We do not expect to see any big jump or fall in the price (of Pu'er) as it will be no good for the tea market," Zou said.
The "antique" tea is known for its unique fragrance, which grows stronger the longer it is preserved. It is also thought to have health benefits.
The price of Pu'er has been rising since 2003, with many buyers collecting the tea instead of drinking it. A block of ordinary compressed Pu'er tea sold for 6 yuan (77 cents) 10 years ago, but is now worth 100 yuan ($13).
But the price began falling in May after several quality scandals and an excessive amount of tea labeled Pu'er flooded the market. Price fluctuations have caused concern in the industry.
"The price of Pu'er tea has risen too far from its actual value as a result of hype (as to its health benefits) from business and investors," said Yang Sizhong, a professor at Yunnan University. "Despite claims about its health effects, it is still only a soft drink that may lose its taste and effects without proper preservation."
Some companies have sold poor-quality Pu'er or tried to pass off freshly picked tea as aged Pu'er, Zheng Bingji, chairman of the Yunnan Pu'er Tea (group) Ltd, said.
"Such illicit behavior will seriously harm the growth of the Pu'er tea industry," Zheng said.
Luo Shaojun, director of the National Inspection and Examination Center for Teas, said the hype about the tea's health benefits was not necessarily negative, provided it helped stimulate industry development.
"But all market players should strictly abide by market rules and ensure the product's quality and safety meet all of the criteria," Luo said.
Some experts blame the Yunnan provincial government for promoting its tea business without streamlining the market.
While Pu'er tea should only refer to the post-fermented variety, a new standard set by the provincial government in 2006 allows for other teas to sit within the Pu'er category, Zou said.
"This new standard seems to facilitate the industrialization of the tea market, but actually it compromises the overall quality of the tea and will harm its reputation long-term," Zou said.
Four days to go before the weekend.