Hong Kong enjoys advantages in its bid to position itself as an international gold trading hub, and the city’s planned government-led central clearing system for gold will distinguish it from other established Asian markets, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said on Thursday.

In the latest Policy Address unveiled Wednesday, the Hong Kong Special Administrative Region government outlined a blueprint to develop the city into an international gold trading market. Key measures include expanding gold storage capacity, establishing a central clearing system to provide reliable settlement services for gold transactions, and supporting the gold industry in setting up a trade association.

At a news conference, Hui said Hong Kong’s strategy is in line with the rising global trend of gold trading, as investors turn to safe-haven assets amid economic uncertainties, with gold one of the preferred choices. These demands present opportunities for Hong Kong to develop a new economic growth driver, he added.

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In the second quarter of this year, global demand for gold jumped 45 percent year-on-year to $132 billion, with gold exchange-traded funds recording strong demand for two consecutive quarters, according to Hui.

When asked about Hong Kong’s core advantages over the likes of Singapore and Dubai, Hui described the SAR as a “unique territory” and highlighted its strong backing from the motherland and a common law system familiar to international investors.

Unlike other venues where the gold trading infrastructure is predominantly owned by the private sector, Hong Kong’s planned central clearing system will be government-run, which can further set the city apart, Hui added.

Earlier Haywood Cheung Tak-hay, chairman of the Hong Kong Gold Exchange, said that many gold transactions currently take place over the counter and lack safeguards, adding that the industry broadly agrees establishing a government-led clearing system which brings those transactions under a formal framework will protect buyers and sellers alike.

The SAR government also aims to build more gold storage facilities and expand capacity to over 2,000 tonnes within three years, while encouraging gold traders to set up refineries in Hong Kong and export refined gold to the city for trading and delivery.

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Huang Wenchan, general manager of Shenzhen Cuilu Jewelry Manufacturing Co Ltd, welcomed the plans, saying it would significantly benefit the development of Hong Kong’s gold industry and that her company may consider whether to establish a refinery in the city.

However, Huang raised concerns about costs, and said that if the government introduced supportive measures, such as subsidies, more mainland gold traders would likely be willing to expand their operations in Hong Kong.

Hui said several industry players have already expressed interest in gold storage opportunities.

Contact the writer at Gabylin@chinadailyhk.com