"China is enhancing the status of the Renminbi through a global gold network." According to a report published by Standard & Poor's Global Ratings on August 25, China is building a global gold network. The central bank is accelerating its holdings of gold, and this move will help promote the Renminbi to play a greater role in international trade, thereby enhancing the international status of the Renminbi.
The report states that once China defines gold as a strategic mineral resource in 2025, it is widely expected that the expansion of Chinese gold miners will exceed that of most peers worldwide. Analysts believe that with the support of a gold network, RMB transactions can be “linked” to gold, thereby enhancing the convertibility of the RMB.
Charles Zhang, Head of Corporate Ratings for Standard & Poor’s Global Ratings in Greater China, said: "If you trade using the RMB, you will always face a problem: how to use this RMB. But if the RMB can be exchanged for gold, the situation might be different. Gold is tradable and can be used in many places."
Last year, the Shanghai Gold Exchange established its first off-shore gold delivery warehouse in Hong Kong and launched exchange contracts denominated in the RMB. The report believes that this has laid an important foundation for the construction of a global gold network. Gold trading centers in cities such as Singapore, Kuala Lumpur, Dubai, Riyadh, and Moscow may also be incorporated into China’s gold network.
Charles Zhang said: "This network connects to the world's largest physical gold market, and it could also attract countries that seek diversification and onshore or nearshore deployment of gold reserves to enhance their control."
July 17th, Guangzhou, Guangdong Province. A standard investment gold bar displayed in a gold store: IC photo.
Data shows that China ranks sixth in the world in terms of gold reserves, behind the United States, France, Italy, Germany, and Russia. Charles Zhang believes that this ranking indicates that as international tensions and conflicts continue to arise, “countries tend to increase their gold reserves by purchasing or producing more gold.”
As of the end of July, China's gold reserves reached 76.08 million ounces, an increase of 640,000 ounces from the previous month. This is the 21st consecutive month of increasing gold reserves.
Last year, nine departments jointly issued the "Implementation Plan for the High-Quality Development of the Gold Industry (2025-2027)", aiming to address development bottlenecks such as insufficient resource guarantees and weak key technical equipment. The plan proposes to achieve a 5%-10% increase in gold resources by 2027, and a 5% or more increase in gold and silver production.
In recent years, the gold industry in China has developed rapidly and has become one of the world's leading countries in gold production and consumption. Statistics from the Chinese Gold Association show that by 2025, China will produce 381.339 tons of gold from domestic raw materials, a year-on-year increase of 1.09%; imported raw materials will contribute 170.681 tons of gold, an increase of 8.81%; and the total consumption of gold will reach 950.096 tons, a decrease of 3.57% compared to the previous year.
