China is facing a “fake gold” problem

09 May 2024 г. 5 minutes of reading

According to the country's government, thousands of Chinese have been tricked into spending money on “fake gold” - low grade or artificial gold - when they tried to buy 999 gold online.

“Fake gold is becoming a big problem in China as more and more Chinese want to invest their savings in the yellow precious metal,” said Sean Raine, managing director of China Market Research Group, cited by CNBC.

According to the World Gold Council (WGC), Chinese consumers bought 603 tons of gold jewelry last 2023, up 10 percent from the previous year. “The demand for gold, combined with ignorant Chinese consumers and investors who cannot distinguish between 24-karat gold and low-grade gold, has led to an increase in fraud,” Rein added.

A user who allegedly bought five gold pendants for 1,985 Chinese yuan (about US$280) on e-commerce platform Taobao said he discovered the gold was fake through a flame test. Fake gold darkens or takes on a greenish hue when exposed to a flame, while real gold becomes lighter when heated.

Local media and consumer websites such as Heimao Tousu, a consumer platform operated by technology giant Sina, have reported an increase in gold fraud. Counterfeiting is not a new phenomenon for China. The economic powerhouse is a world leader in counterfeit and pirated products, which are purchased by both buyers who don't realize they are buying fakes and buyers who actively seek out fakes.

Although online gold trading is growing rapidly, it accounts for only a small share of gold consumption in China, as most consumers still prefer to buy gold offline, according to the World Gold Council. “The WGC reminds consumers not to trade the security of buying for suspiciously low prices,” the international trade association emphasized in an interview with CNBC.