China is the leader in the production and demand for gold in the world.

01 March 2023 г. 5 minutes of reading

China was able to produce 10% of the world's gold production by the end of 2022. Moreover, it also imported 37% of the precious metal mined in the world last year. The official state reserves of gold have crossed the mark of 2000 tons. Now China is in 5th place among the countries with the largest gold reserves.

It is also worth recalling that, according to a report by the World Gold Council (WGC), this Asian country has been the world's largest gold producer since 2007. Since 2013, China has also been the world's largest consumer of gold, with the annual consumption of the precious metal growing 5-fold, from just over 375 tons in the early 1990s to a record high of 1,347 tons in 2013.

It is also worth recalling that, according to a report by the World Gold Council (WGC), this Asian country has been the world's largest gold producer since 2007. Since 2013, China has also been the world's largest consumer of gold, with the annual consumption of the precious metal growing 5-fold, from just over 375 tons in the early 1990s to a record high of 1,347 tons in 2013.


Although gold imports can be quantified using customs data, China is nonetheless very cautious about the transparency of its official and private gold holdings. For many years, changes in reserves were not reported at all.


As the geopolitical axis of power shifts more and more from West to East, which also leads to the transfer of wealth (especially gold), China is becoming more confident and open about gold purchases and reserves, and in September 2019 it announced another increase in official government gold reserves, although there had been silence on the issue for 38 months. But now China is once again providing regular data to the WGC. According to WGC analysts, China plans to accumulate about 5,000 tons of gold in reserves by the end of 2025.


Gold and Dollar

But the desire to buy gold is not limited to the state. Private investors are also buying gold in record numbers. Since the beginning of the military conflict in Ukraine, there has been a massive transfer of savings from US dollars to gold - the same applies to the reserves of Central banks.


The People's Bank of China sells currency and US dollar-denominated securities (primarily government bonds) and exchanges the proceeds for physical gold. Basically, it comes to China through the world's gold center - Switzerland.


In the private sector, the market for gold jewelry, coins and bullion is also showing a marked upward trend. For example, in 2013, the demand for gold jewelry peaked at 939 tons, having increased by 328% over 10 years.


Nine years later, China is still the world's largest consumer of gold, accounting for over 27% of total global demand for gold jewelry. Last year, this figure was 571 tons.


Bars and coins

However, the demand of private and institutional investors for gold bars and coins also showed explosive growth, increasing 18 times - from 12 tons in 2004 to 218 tons in 2022, which, in addition to the growing preference for other assets (real estate) and currencies, also due to rising incomes, increasing wealth and the popularity of gold in China.


Mark 2000 t.

According to WGC estimates, over the past decade, demand for gold in China has averaged 945 tons per year, which is equal to 30% of total world demand. China overtook India in this indicator, which is now in 2nd place.


One of the main demand factors here is the People's Bank of China, which over the past 30 years has replenished its international reserves with 1616 tons of gold. By the end of 2022, the total amount of gold reserves of the Central Bank of China reached 2011 tons, while in the last two months of 2022 it acquired a total of 62 tons, according to the WGC report.


Recovery 2023

In 2023, gold demand in China is expected to recover as the Chinese economy recovers from restrictive coronavirus measures. Chinese household spending is also expected to rise, said Wang Lixin, regional general manager of WGC China.


Growth in demand for gold will also be due to the fact that commercial banks are increasingly focusing on sales of physical gold, and investors are increasingly looking to purchase gold as an efficient and stable store of value and an alternative to the US dollar, euro, pound sterling and other currencies, he added.