THE PACIFIC : Reaching Capitalism’s Peak on Hill of Beans : China: Commodities Exchange melee shows how unready the nation is for market economics.

It may just be beans, but the scene at Beijing Commodities Exchange was unfettered capitalism at its worst: investors cornering the market, a fight on the trading floor, even a hospitalized investor.

The uproar last week at the exchange, in a converted cafeteria in northern Beijing, highlighted the rough-and-unready nature of China’s dabblings with capitalism and showed why Chinese Communist leaders are reaching for the brakes.

The climax came Thursday, when exchange officials indefinitely suspended trading in July futures contracts for mung beans. They also began investigating signs of price manipulation.

“The market economy is very new to China, and futures trading is the peak of the market economy. A lot of people don’t understand the rules,” Huang Yaohua, vice president of the Beijing Commodities Exchange, said in an interview.

The problem started Wednesday, when officials stopped trading because mung bean prices reached their exchange-set ceiling. The exchange also forced some members to scale back their investments because they controlled about 60% of the mung bean market, allowing them to manipulate prices, Huang said.

But investors who lost money were unhappy. About a dozen gathered outside exchange offices Wednesday afternoon complaining of unfair treatment, Huang said.

He said one investor “couldn’t control his emotions” and was hospitalized after he rushed onto the exchange floor and fought security guards.

The investors left after officials briefed them on why trading had been stopped, Huang said.

The exchange floor looked quiet Thursday, but officials said they feared further unrest.

China’s experiments with stocks, futures and other capitalist mechanisms have sparked trouble before, and in some cases violence.

In 1992, would-be investors rioted in the southern boom town of Shenzhen, home to one of China’s two stock markets, after application forms to buy shares ran out. Police used tear gas, rubber bullets and water cannons to quell the riot.

In other cases, trouble has started when greed got the better of common sense. Investors have committed suicide after losing heavily on the stock markets, according to official reports.

Wednesday’s investor protest was the first of its kind in Beijing, but similar occurrences took place at futures markets in Shanghai and Zhengzhou city in central China, Huang said.

China opened stock markets in the late 1980s, followed by futures markets, as part of its shift from a planned economy. Officials generally see the benefit of market economics, but they are alarmed at the excesses.

Recently the government announced a crackdown to halt “the blind development of futures markets.”

The crackdown bans new markets, prohibits index-linked and currency rate-linked futures trading, and requires existing markets to re-register.

The Communist Party newspaper People’s Daily said many investors lost large amounts of hard-to-get foreign currency speculating on international futures markets.

In futures markets, investors buy and sell commodities, gambling on what their prices will be in the future.

China has more than 40 futures markets, but Huang said he expected fewer than 20 to remain open after the crackdown.

The Beijing exchange opened in November with 170 members. It now has 225.

Huang said he was confident his exchange would keep operating. In fact, he said, he hoped the crackdown would restore order to his young industry.

“This is China, we are still studying,” he said.