Chinese 'gold rush': Country diversifying assets
1 Feb, 2012 09:58
China is the world’s fifth-largest holder of gold and seems to be in the market for more. Analysts believe Beijing snapped up around 500 tons of gold in 2011, double what it bought in 2010.
China does not release official gold trade figures, but the Hong Kong Census and Statistics Department announced last month that in November alone, China imported 102,779Kg of gold from Hong Kong which comes as a significant increase from October’s 86,299Kg.Experts say in 2011 China bought not less than 490 tons of gold, while the figure for 2010 was only 245 tons. Financial expert Francis Lun told RT that the reason for the Chinese “gold rush” is simple – the country wants to diversify its assets. “For several years now there were critics and all Chinese economists wanted the government to diversify its holding of foreign exchange,” he said. “China has the largest foreign exchange holding of any country in the world – about one trillion US dollars and most of them in US dollars.” “Starting 2007 there have been calls that China should buy some gold to diversify its foreign exchange holdings and it was not until 2010 that China actually bought some gold and the prices peaked much higher than in 2007 which was something like US$700 per ounce,” Francis Lun added. Francis Lun also observed that it will take about 15 years for China to overtake the US economically. “China’s economy is still about one third of that of the US but of course China has a much better balance of payments, and much larger foreign exchange holdings. Its fiscal deficit is much smaller and the national debt is much smaller and, above all, China has about 9 per cent economic growth while the US has about 1.9 per cent,” he said. “It is really only a matter of time, about 15 years, that China will overtake the US as the largest economy of the world.”