China took an important step June 18 toward playing a larger role in global gold markets that could lead to more investment in British Columbia's mining sector, according to the head of the country's gold mining association.
Xin Song, chairman of the China Gold Association, said a co-operation agreement signed in Vancouver between the association and the World Gold Council (WGC) is a sign of China's determination to become a more active player in the global gold industry. China's emergence can be expected to have an impact on the B.C. mining sector, he said.
The accord between the Chinese association and the gold council, which represents the world's largest mining companies, was the highlight of a daylong gold summit on the world's most valuable metal. It's the first time the London-based gold council has held such a meeting in North America.
“Why in Vancouver? Because Vancouver serves as the gateway to Asia and the Pacific and is a mining capital,” said Song. “Signing in such a venue has international impact for us.”
Song, who is also president of China's largest gold company, China National Gold, singled out B.C. as a destination for investment.
“In B.C., there will be more investments, more projects. This way, we can promote economic development.”
He added that local employment and the development of local benefits are key issues for China's miners when considering global investments.
Song said China has a policy of integrating its gold industry and gold market with global markets as part of its economic development strategy and its increasing desire to play a stronger role in global finance.
He added that gold has always resonated historically and culturally with Chinese people. But now China is taking it one step further by playing a larger international role in gold markets and gold mining.
A key aim, he said, is to build gold reserves to support the internationalization of the Chinese currency.
China emerged as the world's largest gold producer seven years ago, and in 2013 it surpassed India to become the largest gold consumer.
That growth has prompted China to look outward, said Aram Shishmanian, WGC's chief executive officer. He said China is now assuming its rightful place as a leader in the global gold industry, and he predicted that its existing gold exchange will become more integrated with world markets.
“The world of stand-alone China is evaporating very, very quickly,” he told the conference. “The investment market in China could surpass jewelry, which is traditionally the source of demand.”
Shishmanian said that gold is now seen as an investment vehicle in China, accounting for 40% of all Chinese consumer gold demand. Six years ago, the gold investment market was non-existent.
He noted that China's current gold reserves are slightly over 1,000 tonnes, which is only about 2% of the country's U.S. dollar-denominated reserves. Sishmanian said the central bank of China will likely increase its gold reserves, particularly as the renminbi becomes more of a global reserve currency, in order to maintain a stable investment climate.
“The policy of the central bank is to not disrupt the markets, I assure you.”
