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Thursday, April 19, 2018, 18:02
China in leading role as gold market moves from West to East
By Lin Ting in Xiamen, Fujian
Thursday, April 19, 2018, 18:02 By Lin Ting in Xiamen, Fujian

Song Xin, president of the China Gold Association, discusses healthy gold market development at the Global Gold Market Summit 2018 in Xiamen, Fujian province, on April 18, 2018. (PROVIDED TO CHINA DAILY)

The global gold market has moved from the West to the East led by China, Chief Executive Officer of the World Gold Council Aram Shishmanian told a gold forum on Thursday.

And building on that position, China is assuming leadership in the world of gold, he said at the Global Gold Market Summit 2018 in Xiamen, East China’s Fujian province. “Your leadership, I have not doubt, will determine or help determine the structure and form of the evolving international gold market.”

The summit, the third of its kind, was organized by the Shanghai Gold Exchange and the Xiamen People’s Government and gathered hundreds of industry heavyweights and professionals across the world.

Shishmanian noted that China was small in the gold industry 20 years ago and has gone through “spectacular transformation”as a result of “very careful and deliberate strategy” with the support of the PBOC.

He said it is the formation of the Shanghai Gold Exchange, which is at the heart, combined with a series of liberalization policies and steps, that created the conditions necessary for what we see today. The China market has crossed the whole chain of the industry that does not exist in any other country of the world.

Over the years China has been markedly improving its well-coordinated and orderly market operations at varied levels, with its modes of operations more diversified, market access expanded, liquidity improved and pricing capability enhanced, according to Shanghai Gold Exchange Chairman Jiao Jinpu.

China has been the world’s largest producer, consumer, importer and processor, Song Xin, president of the China Gold Association, said.

“No matter in the production, processing and consumption of gold, or in related investment and transaction, we have the responsibility and capability in leading the healthy and harmonious development of the global gold market through international cooperation,” Song told the summit.

Huang Qiang, executive vice mayor of Xiamen, delivers a speech at the Global Gold Market Summit 2018 in Xiamen, Fujian province, on April 18, 2018. (PROVIDED TO CHINA DAILY)

China saw its gold output decline 6 percent year by year in 2017 and drop 5.4 percent in the first quarter of this year but still managed to keep its No 1 rank in the world. Its consumption of gold, around 1,089 tons in 2017, was up by 4.1 percent.

Shishmanian pointed out that apart from investment, mining and the exchange, China has been the world’s leader in patents using gold technology, “the single largest country by many multiples”. Song said Chinese mining enterprises have been exploring new technology to follow sustainable development.

Yet challenges abound especially when China is at the crossroads, including fragmented mechanisms, impact on investment by narrow interest groups, and too domestically focused infrastructure.  Shishmanian raised three fundamental questions to answer: How can China’s domestic gold market be further strengthened, how can China trade links prepare and participate in the global integration, and how can the gold market support the globalization of the renminbi.

Song also acknowledged that China’s efforts for the healthy market has met with increasing uncertainties in global trade disputes and geopolitical crisis,

He said China has to help build up global market mechanisms in order for the gold market to develop healthily and harmoniously. While encouraging regional market going global, standardization of basic criteria and even some regulations for the industry should be enhanced and promoted for wider acceptance so that the whole industry could adapt to new changes.

Moreover, there should be deeper cooperation among market players around the world. As all participants will be expanding links and integration to tap own potential and achieve mutual benefits.

In a welcome speech in the morning, SGE Chairman Jiao Jinpu said the Shanghai Gold pricing has proven conducive to market health and the exchange is seeking further cooperation with global partners. It also inked a deal for strategic partnership with Moscow gold exchange Thursday morning. 

Jiao said the Shanghai exchange will follow the country’s opening-up policies closely and accommodate needs of global gold market operators.

The two-way opening-up of the gold market, flagged by the SGE, has drawn participants from outside the mainland while extending its role in global mechanism and its pricing engaging more businesses in the world.

Derek Sammann, Chicago-based CME Group's Senior Managing Director, Global Head of Commodities & Options Products, also saw China playing a prominent role the gold market pricing and trading.

China’s rising demand has been in contrast to declines in Europe and North America, he said, and China’s engagement can better help the globalization of the gold market.

Also speaking at the summit were Les Male, Chief Executive Officer of the Dubai Gold & Commodities Exchange (DGCX), the largest and most diversified derivatives Exchange in the Middle East; Ruth Crowell, Chief Executive of the LBMA; a senior official from Russia’s central bank; top executives of China Industrial Bank Co, Ltd, Zijin Mining Group Co, Ltd, and Xiamen Gold Investment Co, Ltd, and Commercial Bank of China, among others.

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