By ANDREW JACOBS MENGHAI,


China - Saudi Arabia has its oil. South Africa has its diamonds. And here in China’s temperate southwest, prosperity has come from the scrubby green tea trees that blanket the mountains of fabled Menghai County.


Over the past decade, as the nation went wild for the region’s brand of tea, known as Pu’er, farmers bought minivans, manufacturers became millionaires and Chinese citizens plowed their savings into black bricks of compacted Pu’er. But that was before the collapse of the tea market turned thousands of farmers and dealers into paupers and provided the nation with a very pungent lesson about gullibility, greed and the perils of the speculative bubble.


“Most of us are ruined,”said Fu Wei, one of the few traders to survive the implosion of the Pu’er market.“A lot of people behaved like idiots.”


A pleasantly aromatic beverage that promoters claim reduces cholesterol and cures hangovers, Pu’er became the darling of tea fanciers in recent years as this nation’s nouveaux riches embraced a distinctly Chinese way to display their wealth, and invest their savings. From 1999 to 2007, the price of Pu’er, a fermented brew invented by Tang Dynasty traders, increased tenfold, to a high of $330 a kilogram for the finest aged Pu’er, before tumbling far below its preboom levels.


“The saying around here was,‘It’s better to save Pu’er than to save money,’”said Wang Ruoyu, a longtime dealer in Xishuangbanna, the lush, tea-growing region of Yunnan Province that abuts the Burmese border.“Everyone thought they were going to get rich.”


Fermented tea was hardly the only investment frenzy that swept China during its boom years. The urban middle class speculated mainly in stock and real estate, pushing prices to stratospheric levels before exports slumped, growth slowed and hundreds of billions of dollars in paper profits disappeared over the past year.


In Yunnan, a cabal of manipulative buyers cornered the tea market and drove prices to record levels, giving some farmers and traders a taste of the country’s bubble? and its bitter aftermath.


At least a third of the 3,000 tea manufacturers and merchants have left the business. Farmers have begun replacing tea trees with staples like corn and rice. Here in Menghai, the newly opened six-story emporium built to house hundreds of buyers and bundlers is a very lonely place.


“Very few of us survived,”said Mr. Fu, 43, among the few tea traders brave enough to open a business in the complex. The rise and fall of Pu’er partly reflects the lack of investment opportunities and government oversight in rural Yunnan, as well as the abundance of cash among connoisseurs in the big cities.


Wu Xiduan, secretary general of the China Tea Marketing Association, said many naive investors had been taken in by the frenzied atmosphere, largely whipped up by out-of-town wholesalers .


He said that as farmers planted more tea, production doubled from 2006 to 2007, to more than 90,000 metric tons. In the final months, some producers shipped their tea to Yunnan from other provinces, labeled it Pu’er and enjoyed huge markups. When values hit absurd levels last spring, the buyers unloaded their stocks and disappeared.


With its near-mythic aura, Pu’er is well suited for hucksterism. It was supposedly invented by eighth-century horseback traders who compressed the tea leaves into cakes for easier transport.


Unlike other types of tea, which are consumed not long after harvest, Pu’er tastes better with age. Over the past decade, the industry has been shaped in ways that mirror the Western fetishization of wine. Enthusiasts talk about oxidation levels, loose-leaf versus compacted and whether the tea was harvested in the spring or the summer. (Spring tea, many believe, is more flavorful.)


But with no empirical way to establish a tea’s provenance, many buyers are easily duped.“If you study Pu’er your whole life, you still can’t recognize the differences in the teas,”said Mr.Wang, the tea buyer.“I tell people to just buy what tastes good.”


Among those most badly bruised by the crash are the farmers of Menghai County. Villagers built two-story brick homes, equipped them with televisions and refrigerators and sent their children to schools in the district capital.


“Everyone was wearing designer labels,”said Zhelu, 22, a farmer who is a member of the region’s Hani minority and uses only one name.“A lot of people bought cars, but now we can’t afford gas so we just park them.”