The People’s Bank of China has removed all barriers to gold licensing for the manufacture, distribution and retailing of gold products. The move is a significant step towards liberalizing the gold market, and follows the establishment of the Shanghai Gold Exchange last year.
There is now effectively a free internal market for all gold supply in China, which is an important achievement for the World Gold Council. The Council has been encouraging deregulation of the Chinese gold market and which was influential in setting up the Shanghai Gold Exchange.
Coupled with other liberalization measures, the new government policy is expected to have a major impact on the gold jewelry sector in China. Last year, gold jewelry demand in China amounted to around 200 tonnes, compared with 490 tonnes in India. Gold consumption per capita in China last year was 0.16 gram, less than a third that of India and one-fifth that of Taiwan.
From now on, international companies are free to invest in gold jewelry manufacturing, wholesaling and retailing in China without having to obtain prior approval from the People’s Bank of China, provided they purchase the gold from the local market.
However, the import and export of gold will continue to be regulated, and producers of gold jewelry manufactured in China for sale overseas will still need to be licensed by the People’s Bank.
“This is certainly a historical moment for the Chinese gold industry, which has been closely regulated for many years,” says Albert Cheng, the WGC’s managing director in the Far East. “Foreign competition is expected to stimulate efforts of the local jewelry trade to upgrade their product design and quality, and a more competitive market will benefit consumers and the industry’s long-term development.”
Adds WGC CEO James Burton: “This shows a commitment by the authorities in China to press ahead with deregulation, and augurs well for the future of gold demand.”
The WGC has been working with the People’s Bank of China for several years in an attempt to establish a deregulated market.
— The preceding is from an information bulletin published by the London-based World Gold Council.
HolderTonnesGold’s % share of reserves
1. U.S. 8,14957.2%
2. Germany3,445.8 42.9%
3. IMF3,217na
4. France3,024.654.3%
5. Italy2,451.848.8%
6. Switzerland1,88834.4%
7. Netherlands84349.6%
8. ECB766.9na
9. Japan 765.21.8%
10. China (Mainland)6002.4%
11. Portugal591.837.1%
12. Spain523.414.5%
13. Taiwan422.12.8%
14. Russia387.78.9%
15. India357.85.7%
16. Venezuela35629.8%
17. Austria317.522.2%
18. U.K.313.98.2%
19. Lebanon286.830.7%
20. Philippines266.418.2%
21. Belgium25819.5%
22. Bank for Int’l 197na Settlements
23. Sweden185.410.8%
24. Algeria173.67.7%
25. South Africa173.624.7%
26. Libya143.89.7%
27. Saudi Arabia1437.2%
28. Singapore127.51.7%
29. Greece122.414.5%
30. Turkey116.14.6%
31. Romania105.314.0%
32. Poland 102.93.8%
33. Indonesia96.53.4%
34. Australia79.74.1%
35. Kuwait798.7%
36. Thailand77.92.2%
37. Egypt75.66%
38. Denmark66 2.7%
39. Pakistan65.18.3%
52. Canada 18.60.6%
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