From the Experts: The State of the Chinese Market

By Kent Ponterio, Senior Numismatist and Consignment Director

If there is one question we are repeatedly asked it is “what is the state of the Chinese market?” My answer in short is very healthy and rapidly evolving. However that being said this is not a question that can be easily answered with a short one liner.

The Chinese coin market is one of the fastest evolving markets. In the United States you are constantly hearing statements such as “The Chinese market is hot” or “The Chinese market is down” or the even more caustic statement “When is the bubble going to burst”. My general response to those statements is usually something along the lines of “I don’t think a country with a population of one and a third billion is a bubble”.

 Truth told the Chinese market is one of the most active markets which is constantly changing and adapting. Some things are going up in price while others are going down. One thing that seems clear is that there is no lack of interest or buyers. That being said, the sophistication of the buyers in general seems to be growing at a rapid pace. Changes within the market are very evident from auction to auction and predominantly in a very healthy manner.

To further understand the Chinese coin market you really have to break it down into several different categories or sub markets to be analyzed individually. The Chinese market is very complex and although many aspects are related, they don’t necessarily pertain to or attract the same buyers or sellers. For instance the Modern Chinese coin market is a very different market than the Older Numismatic coin market with a very different base of buyers. Some other categories of Chinese collecting can be broken down even further. For instance:

The Numismatic coin market

The term “Numismatic coins” or “Older Struck coins” are sometimes used in reference to the market for Chinese coins that are pre modern coinage issues and post cast coinage. In general this is a very strong market with the largest amount of participation and interest. This covers a lot of areas and can probably be separated into several different sub categories. Some of the more popular areas are as follows:

Provincial issues

Coinage issued by the various provincial mints during imperial China. It is vast and encompasses many different types, denominations and varieties. This period of Chinese coinage was far from unified with each provincial mint essentially issuing its own coinage. In fact several mints issued coinage on a different standard or fineness than neighboring mints. This causing some monetary chaos and eventually lead to the issuing of a unified coinage standard. There are a lot of aspects to take into consideration when collecting provincial issues. For instance demographics can play a large role with certain provinces. Chihli province is highly collected and some coins that are more common may bring higher prices than comparable coins from a less populated province. This is due to large cities like Beijing being located within this province. On the other hand some great rarities from a lesser populated or less popular province seem reasonably priced in comparison due to a smaller collector base.

Empire general issues

Essentially covering unified coinage issued towards the end of Imperial China up through the 1911 revolution and the founding of the republic, i.e. the first real unified coinage of China.

Republic issues

Coinage issued after the founding of the republic. This is a very popular and extensive series with a variety of historically important commemorative issues, many depicting historical figures and events relevant to the 1911 revolution, the founding of the republic and the events that followed.  This is a very interesting series that documents much of Chinas history during the early 20^th century.

Soviet issues

This primarily covers coinage issues starting in 1931 with the rise of the communist party prior to the founding of the Peoples Republic of China.

Copper coin collecting

In decades past collecting Chinese copper coins remained somewhat unappreciated. This can be noted when one examines some of the famous Chinese collectors of the past. For instance Eduard Kann and Irving Goodman among other famous old time Chinese collectors focused primarily on gold and silver issues, paying little or no attention to the coppers. While this was not the case for all Chinese coin collectors as is evident with the works on numismatists such as Tracey Woodward. In years past this was the exception, not the rule. However no longer is this considered the case. Collecting Chinese copper coinage is an academic field filled with varieties and types with a vast following.

These are just a few of the various areas of the “Numismatic coin market”. This can be dissected even further into other areas such as Sycee, Republic of China issues etc., not to mention early cast coinage and warring states period. In short the different areas attract different groups of buyers. Although there is some cross over amongst collectors, very few collect all of the coinage of China. This would take an enormous amount of money in today’s market.

The Modern Chinese Coins market(i.e. 1979-date)

This is a very active market that has had some big changes in the last few years. There has always been a good collector base for modern Chinese coins, and for a good reason. Some of the most beautiful designs of all modern coins are incorporated into their motifs. They are filled with historical content and beautiful designs that are some of the most attractive modern coinage issues worldwide. However up until recent years this market was predominantly based outside of China. Countries like the United States, Germany and other European nations were the largest buyers of this type of coinage for many years. The last few years have shown massive increase in the value for modern Chinese coins, largely based on the developing market in China. Of all of the markets for Chinese material, the Modern coinage market has increased the most rapidly in regards to value over the last few years. In many cases coins went up way too fast in a very short period of time. This is evident in the market place now, as prices for many modern issues are adjusting downwards and finding the proper levels. The market seems stable and coins are selling at realistic levels. The market was probably at its height last year, during the summer of 2011. Prices since then have dropped, but have stabilized.  It is very clear that there is still plenty of interest in modern Chinese coins as there are certainly still a lot of buyers. The best way to describe the price structure for the modern Chinese market is stable with plenty of interest. Not to mention the one factor that most people seem to overlook when they see a price drop. That being, although the prices may be depressed from last summer, they are still multiples and in some cases many multiples of what they were only a couple of years ago.

The Chinese Paper Money market

When one takes into account different types, variety, issuing authorities etc, there are probably more bank notes one can collect from China than any other country in the world. Hence with this much variety, it attracts a lot of collectors. This is a very strong market that is largely driven by a solid base of dedicated collectors. In most markets, paper money seems to be somewhat overshadowed by coin collecting and China seems to be no exception to this rule. Dollar for dollar a collector can purchase a rare bank note for a fraction of what a coin of similar rarity would cost. It seems more focus is being placed on Chinese paper money, perhaps due to conventional Chinese coin collectors being priced out by the large rises in prices. Hence this is a very stable market.

If there is one general observation of the overall market, it is that quality and rarity are doing well and still rising in price. It is very clear that nice original coins in top condition are still commanding high prices. Originality is starting to play a major factor in pricing. For instance if you take two coins in similar grade, one that has nice original toning will bring a premium over one that is not. Even further a coin with unattractive toning will tend to realize less. This was not the case a year ago when buyers were simply looking at the numeric grade assigned to the coin by the grading services. Common and average to low grade items have dropped, found a price and stabilized. In the last few years we have witnessed a buying frenzy for Chinese material, sometimes with no regard given to grade or rarity. Like many emerging markets opportunists jumped on the numismatic band wagon hoping to make a quick dollar in a rapidly escalating market. In many cases with very little knowledge of the material they were buying. Many of these buyers had the mentality “if it’s Chinese it must be good” and tended to buy many average grade and common coins, pushing up the prices for generic coins. When prices stopped escalating for the more common material many of these less savvy buyers got cold feet and left the market. In my opinion this is probably a good thing. If you take away the speculators you are left with a core group of serious collectors and the market will quickly find proper levels. In my opinion this is the sign of a healthy evolving market that is ready to take its next step forward.