How China is taking over the world, one gold bar at a time

In the last 100 years China’s gold mine productivity has climbed from just 4 tons of gold in 1949 to an expected 440 tons this year, none of which is exported. Hong Kong imports have been over 600 tonnes this year alone, but still more gold is demanded.

Whilst it may appear that China has exploded onto the gold scene this is by no means the case. China’s ancient monetary history is well documented. They are the world’s oldest scientists when it comes to different forms of money, having being the first to experiment with paper money and different metallic standards. Therefore during an international financial crisis one would imagine that the country with the longest and most diverse monetary history would be the place to turn to for direction.

Global domination in less than a century?

Less than 100 years ago the Shanghai Gold Business Exchange was one of the biggest gold centres in the Far East. Since then gold has gone from being an almost illegal investment to a market that has become increasingly open in modern China.

Whilst the Western world works to keep the paper system upright, China’s experience with fiat money and its concomitant phenomena of debasement and inflation may mean that they are looking to diversify their monetary system. Their recent history certainly suggests as much, as they have been gradually opening themselves up to the world’s most precious marketplace.

Between 1950 and 1995 small changes in China’s gold market were made, a gold jewellery retail market was opened and the Gold Panda was launched. But the first indication that the government was looking to develop the gold market came in 1993. At this point the State changed the price-fixing method for gold from a state-determined price to a floating one.

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