Beijing bursts ‘moong bubble'

The lowly moong bean, a protein-rich food source in large parts of Asia, is at the centre of a recent price-manipulation bubble in China cooked up by, among others, a fake nutrition expert who recommended it as a cure for various diseases, including cancer.

Chinese authorities have launched rearguard action to deflate the ‘moong bean bubble’, which saw prices soar four-fold earlier this year, and stoked food inflation that threatened to derail an infirm economy recovery.

Beijing’s experience of bursting the bubble may have important policy lessons in India, where too authorities are battling to tame food inflation, partly driven by rapacious traders who have driven up prices of pulses to prohibitive levels.  

The ‘moong bean bubble’ is strikingly similar to a runaway price hike in garlic last year, which too was the result of price manipulation by artful speculators who invoked specious medical mumbo-jumbo to ramp up artificial demand.

Late last week, government officials levied a 1 million yuan (about $150,000) fine on a mid-sized commodities trading house that had, they said, manipulated bean prices by spreading misinformation about falls in production levels.

Xu Kunlin, chief of the price department at the country’s top economic planning body, the National Development and Reform Commission (NDRC), alleged that moong bean prices soared since Jilin Corn Center Wholesale Market Co told an industry conference last October that production levels had fallen sharply.

The price manipulation was also facilitated by an unlikely scamster: a self-styled high-profile nutritionist  named Zhang Wuben, who wrote a best-selling book recommending the bean could cure all kinds of diseases, from hypertension to diabetes.

Last month, Zhang was unmasked as an impersonator who had faked his medical credentials; his temple-styled clinic, where he offered high-priced appointments — which were fully booked until 2012 — was demolished.

Zhang had branded himself as hailing from an “aristocratic” family of traditional Chinese medical practitioners; he had claimed that his father had served as the private doctor of a senior central Communist Party official. In fact, Zhang was revealed as a 47-year-old laid-off worker in a textile factory; the nearest he came to practising medicine was that he gave massages.

In November 2009, Zhang launched his book Cure the Diseases
You Get from Eating by Eating, a simplistic ‘food therapy’ manual that argued that “the best curative effect can be achieved by persistent food therapy”. Among his top ‘food therapy recommendations’ were moong bean, eggplant, radish, and white gourd. The book, and an accompanying DVD, went on to sell 3 million copies. A 10-minute consultation, fully booked until 2012, cost 300 yuan; but impatient patients who were unwilling to
wait could pay up 5,000 yuan for an ‘emergency’ session.

In response to this two-track scam artistry, moong bean prices soard from 9 yuan a kg in October to nearly four times as much in May. It also stoked food inflation, leading consumer price inflation to overshoot the government target of 3% in May.

That prompted a government investigation, which traced the runaway price rise to the October conference. NDRC has since established two offices dedicated to preventing “anti-competitive” — or monopolistic — behaviour in the markets to check price manipulation.

The NDRC has also been fighting other ‘price rigging’ battles: last month, for instance, it criticised a Beijing newspaper that “falsely” reported that a garlic speculator who had earned millions of yuans in profits had since stocked up on gold.