Chinese Gold in the International Arena
Gold is one of the most coveted and sought-after substances in the world, both for its unique beauty and its cultural, economic, and symbolic significance in many cultures. As one of the oldest forms of wealth and investment, gold has played a major role in the global economy since ancient times, and the importance of gold to China has only grown throughout the years.
As the world’s largest producer and consumer of gold, the Chinese government has long kept a tight grip on the gold market. Gold is highly regulated in China—the government requires all gold-related companies to apply for a gold trading license from the State Administration of Foreign Exchange. As of 2018, China produced more than 430 tons of gold in 2017, a 10% increase from the previous year. China is also the world’s largest importer of gold, importing nearly 1,293.8 tons in 2018, most of which was re-exported as jewelry, coins, ingots and other products.
Given the country’s significant presence in the international gold market, the Chinese government has actively sought to increase its influence in the global gold arena. The Chinese Gold & Silver Exchange Society (CGSE), under the control of the People’s Bank of China, is responsible for organizing, developing, and regulating China’s gold and silver markets. This society is responsible for the country’s gold standard program that tracks and sets standards for gold prices and has helped China become the world’s third-largest gold market after the United States and India.
The Chinese government has also used gold as a tool of international diplomacy, using the precious metal to secure trade deals and other forms of cooperation with other countries. For example, in 2015 China and the United Kingdom signed an agreement to use gold to finance the UK-China Infrastructure Investment Plan. This plan involves the British and Chinese governments working together to invest in infrastructure projects in the UK, and involves the use of gold as a store of value.
Furthermore, the Chinese government has recently announced an initiative called the “Gold-Backed Global Reserve System” which allows countries to use gold as a form of “reduced risk and counter-cyclical reserve asset”. This initiative, as proposed by the Bank of China and the People’s Bank of China, would allow countries to write gold into their reserves and then use it to back their reserve payments.
The Chinese government’s growing influence in the international gold arena reflects the country’s increasing importance in the world market. As gold prices continue to fluctuate, China is taking strategic steps to ensure that it has a strong presence in the global economy and is poised to be a major player in the gold market for years to come.
