Gold production and demand: China's double world market leadership
News Arnulf Hinkel – 31.07.2017
Over the course of just a few decades, China has developed into one of the most important markets for gold. Today, regarding both gold production and demand, China has left all other nations behind. Considering that in the 1950s private ownership of gold was still strictly forbidden in China, this is quite remarkable. In the late 1970s, gold led a shadow existence as a result of rigorous government regulation. It was not until the 1990s that the People's Bank of China began to reduce restrictions on the purchase of gold, at the same time facilitating more efficient trading, which kicked off the country’s rush for the precious metal. The increased demand for gold was additionally fuelled by the economic change that the country has undergone since the 1990s. Over the past 20 years, China has evolved from a typical communist agricultural economy to one of the world's leading trading nations.
The increasing prosperity of the population is reflected in its demand for gold products. In 20161, almost 31 per cent of all global gold jewellery with an overall weight of 629 tonnes was purchased in China. Chinese private investors also are now leading when it comes to the acquisition of gold bars and coins, which has only been fully legal since 2004. In 2016 Chinese private households were responsible for 27% of all purchases worldwide, clocking in at 284.6 tonnes.
In addition to the demand for gold, China is also a world leader in the mining of gold. With a volume of 450 tonnes in 20152, China has left all other important gold producing countries far behind, such as Australia (278 tonnes) and Russia (252 tonnes). Another major driver of the Chinese gold demand is the country’s flourishing electronics industry: in 20143, 56 tonnes of gold were needed for electronics, wires, gold bonding and gold contacts, only exceeded by Japan at 83 tonnes.
1Source of all 2016 data: World Gold Council
2 Source of all 2015 data: United States Geological Survey
3 Source of all 2014 data: GFMS/Thomson Reuters