China's gold import has soared to a record 209 tonnes this year, putting it on track to overtake India as the world's largest consumer of the yellow metal and become a significant force in global bullion prices.The surge comes at a time when Chinese investors look for insurance against rising inflation and currency appreciation, the Financial Times reported.
China, already the largest bullion miner, imported more than 209 tonnes of gold during the first 10 months of the year, a five-fold increase from an estimate of 45 tonnes last year, paving the way for Beijing to overtake India as the world's largest consumer of gold.
Chairman of the Shanghai Gold Exchange, Shen Xiangrong, said uncertainties about the Chinese and global economies and inflationary expectations had 'made gold, as a hedging tool, very popular'.
China's growing gold consumption came from all factors, including jewellry sales, private investment, as well as industrial and central bank demand. In 2009, gold consumption in China reached 462 tonnes in all sectors.
And China's demand for gold has increased an average of 13 per cent annually over the past five years, making China the world's second largest consumer market for gold after India, the state-run Xinhua news agency reported.
"Investment is really driving demand for gold," said Cai Minggang, at the Beijing Precious Metals Exchange.
"People
don't have any better investment options. Look at the stock market, or the property market -- you could make huge losses there," the report quoted Cai as saying.
China has encouraged retail consumption, with an announcement in August of measures to promote and regulate the local gold market, including expanding the number of banks allowed to import bullion.
The rise in Chinese demand could further inflate gold prices.
Bullion hit a nominal all-time high of $1,424.10 a troy ounce last month.
But adjusted for inflation, prices are far from the 1980 peak of $2,300, the Financial Times said.
"The trend is undeniable -- gold demand in China is rising rapidly," said Walter de Wet, of Standard Bank in London.
China surpassed South Africa three years ago as the world's largest gold producer. Chinese total gold demand rose last year to nearly 450 tonnes, up from about 200 tonnes a decade ago, according to the World Gold Council.
Analysts anticipate a further leap this year, putting the country with in a striking distance of India's total gold demand of 612 tonnes in 2009, the paper said.
