These days, currencies are increasingly fragile and precious metals such as gold and silver have become real safe havens. Indeed, in a society where many eyes are turned towards the Atlantic, where the main financial turbulence is brewing, China is taking advantage of the situation to gain the upper hand on the money market in the face of rising gold prices.

Chronology of the Chinese gold rush

Over the decades, China has built its economic dominance on the gold market, bar by bar. Today, it has a sizeable monopoly on the global physical gold market. 

It all began in 1930, with the creation of the Shanghai Gold Business Exchange, one of the largest gold centres in the Far East. Then in 1950, the People's Bank of China introduced measures to bring gold and silver under total central government control. Private transactions were banned. 

Similarly, in 1975, China produced 14 tonnes of gold, less than 1% of the world total. In 1982, China took its first step towards liberalising the domestic gold market by opening a retail market for jewellery. At the same time, the Gold Panda began to be issued (today it is the most widely recognised Asian gold coin). 

In 1993, a second step was taken towards a more open market: the price of gold, which until then had been determined by the State, became a floating price. By 1995, 100 tonnes of gold were being produced in China every year. 

2002 also saw the official reopening of the Shanghai Gold Exchange, a major breakthrough in the revolution of the gold system. This time, the price of Chinese gold was entirely determined by the market, and in 2004, investors were able to invest their financial assets in gold. 

Finally, the Chinese gold market reached its peak in 2012 and became the fastest-growing market in the world, with 400 tonnes of gold produced.

A growing gold reserve

After more than two years of slowdown, China is buying gold again. In December 2022, the Chinese central bank increased its reserves by 320,000 ounces (around 10 tonnes). The reasons for this are rising geopolitical tensions, especially in Ukraine and Taiwan, economic decline and a desire to speed up the process of de-dollarisation of the world. 

While China has very often kept quiet about its gold purchases to avoid revealing the gigantic size of its stockpile, the economic context has led the Chinese government to change its strategy in recent years. By publishing its gold purchases once again, it is showing the world that it has a global currency, with the yellow metal seen as a genuine monetary standard.

Over the years, then, China has contributed enormously to strengthening gold's place on the financial markets. For more than a decade, it has topped the podium as the world's largest gold producer, just ahead of Australia. The Middle Kingdom produces around 15% of all the gold mined in the world.