On June 3, 2007, a 6.4 magnitude earthquake rocked China’s Yunnan province. The quake killed three, injured hundreds, and left behind property damage worth billions of yuan. It was a tragic setback for Yunnan’s largely rural counties that had been enjoying an economic boom as the seat of China’s pu-erh tea industry. For the preceding decade, sales in pu-erh tea had surged, and those sales were about to be scrutinized.
When news of the earthquake reached Guangzhou’s Fangcun tea market—one of the largest in China and almost a quasi–stock market for the tea trade—something impossible happened: the going price of pu-erh tea remained the same. This contradicted bedrock economics. The earthquake had damaged tea factories and infrastructure, so the price of pu-erh tea should have gone up to reflect the lowered supply. And if it wasn’t going up, that had to mean someone in the commercial chain had untethered tea prices from reality.
