China’s gold chase to gain pace in an uncertain world
Tue Aug 25 2026
Highlights
China has recognized gold as a “strategic mineral” critical to the country’s security amid rising uncertainties in the world. S&P Global believes this signals that China will continue to build its holdings and step up support for its gold industry. These efforts will fuel Chinese miners’ expansion against the slower growth of their global peers. They will also help China retain its place as the largest consumer and producer amid the gold chase across the developing world.
China’s efforts in gold are more comprehensive and lasting in nature than a simple “gold grab.” They are motivated by the country’s long-term aims such as raising economic resilience and broadening global use of the renminbi.
As such, we expect these efforts to see gradual progress but continued commitment. They will drive a wide range of government actions, including building gold holdings, promoting yuan-based gold trading, and supporting gold exploration and production globally.
Events since the 2022 escalation of the Russia-Ukraine war have led to a renewed push on these fronts. They also led to a global gold chase among governments and savers, which in China was further propelled by a five-year-long property market downturn.
Despite this, China’s gold holdings have grown more slowly and remain smaller than most countries as a share of official reserves. In size, it ranks only sixth in the world. This will likely support sentiment for further build-up through purchases or production.
These factors drove top Chinese miners to accelerate expansion at home and abroad while their global peers kept output stable. Supported by improved execution and strong finances, we expect them to pursue this strategy without weakening their credit profiles.
In 2025, China opened its first offshore gold vault in Hong Kong as part of its “Gold Road” initiative. The vault will serve as a model for an envisaged global network of gold vaults that supports yuan-based gold trading and gold-backed yuan conversion outside the US dollar.
We expect China to pursue these and other plans for gold as international tensions and conflicts continue to arise. In the uncertain world ahead, one certainty may be that China’s role in the global gold market will grow further as these efforts unfold.
Strategic mineral for a world in ‘disarray’
During an April 2026 meeting in Beijing with Spanish Prime Minister Pedro Sánchez, President Xi Jinping remarked that “the international order is crumbling into disarray,” flagging a concern Beijing has been raising as tariffs and conflicts cast increasing uncertainties over the global trade and security order.
These uncertainties have reinforced the importance of gold among Chinese policymakers. As a result, its role was elevated from a financial asset to a strategic cornerstone, implying that China will prioritize gold and the gold industry in the years ahead.
In 2025, nine top departments of the Chinese government, including the National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology (MIIT), and the ministries of natural resources, commerce, and others released the “Gold Industry High-Quality Development Action Plan 2025-2027” (the “2025 Plan”).
The plan recognized gold as a “strategic mineral” and a “cornerstone of China’s financial and industrial security,” marking a shift from past guidance by focusing on gold’s strategic significance to the country’s security. This came as national security objectives became the central organizing principle behind China’s policies.
From privatization to largest producer and consumer
This shift is notable relative to policies that have historically focused on production and market development. In a few decades, these policies allowed China to become the world’s largest gold producer and consumer. The renewed focus could lead to similarly significant outcomes.
In 2004, China privatized its gold market and ended over 50 years of strict state control of the mineral. This was followed by reforms to expand gold supply, encourage individual investments in gold, and develop the institutional capacity of the country’s exchanges and banks to trade bullion and offer retail gold products.
These efforts led China to become the world’s largest gold producer in 2007, a position the country has held since. This was in part due to the slowing or falling output of other top gold-producing countries such as Russia, Australia, and the US over much of the last decade.
How did China become the world’s largest gold producer?
In 2004, China privatized its gold market. Individuals were allowed to legally own and sell bullion. Gold investing was encouraged to “store gold among the people.” Banks were permitted to offer gold investment products to the public. Licensing barriers to manufacture and retail gold jewelry and other physical products were also removed.
In 2005, the Shanghai Gold Exchange (SGE) and the Industrial and Commercial Bank of China (ICBC) launched physical gold trading for individuals. A year later, Bank of China introduced gold options to customers.
In 2008, the Shanghai Futures Exchange (SFE) launched China’s gold futures market, and in 2009, ICBC offered the first long-term gold investment plans for individuals.
To keep up with the resulting demand, domestic and foreign investments were encouraged to upgrade production management and technology and to consolidate small, inefficient mines. The NDRC’s gold five-year plan for this period (2006-2010) also focused on boosting production, intensifying prospecting, and verifying reserves.
In 2007, China became the world’s largest gold producer, overtaking South Africa, which had held the position for a century prior.
From largest producer to largest consumer
In 2010, in the “Guiding Opinions on Promotion of the Gold Market” (2010 Guidance), China recognized gold as an important asset class in its financial system in addition to being a key industrial commodity.
Issued by six top government departments, including the People’s Bank of China (PBOC), NDRC, MIIT, Ministry of Finance, and others, the 2010 Guidance fueled broader reforms that liberalized gold imports and boosted gold production to meet booming demand unleashed by earlier measures.
These policies allowed China’s gold consumption — defined as retail buying of gold jewelry, bars, and coins — to become the world’s largest in 2013. Since then, Chinese gold consumption has stayed well above the next largest country (India), amounting to roughly 5x the US, 3x Europe, and nearly double all other emerging markets combined.
From globalization to strategic shift
The next phase in China’s gold policies — globalization — was interrupted by the pandemic but was revived by a renewed focus on gold that will likely drive Chinese efforts for years to come.
The globalization drive began with the SGE’s launch of its international board (SGEI) in 2014. Motivated by Beijing’s aim to broaden global use of the yuan, this phase unfolded with China’s push to set up renminbi clearing facilities and swap agreements with trading partners.
In 2016, SGEI introduced China’s yuan-based global benchmark — the Shanghai Gold Benchmark Price (SGBP). This was followed by the 2017 launch of the first futures contract in yuan outside China on the Dubai Gold and Commodities Exchange and the 2019 launch of futures trading in yuan and US dollars on the COMEX.
The globalization drive slowed during the pandemic, but it resumed with greater urgency in 2022. That year, Western sanctions froze Russia’s foreign exchange reserves due to the Russia-Ukraine war. This raised concerns among policymakers in China and elevated the importance of gold as a potential way to address such risks.
The yellow BRICS road
The Gold Road (also reported as “Gold Corridor”) aims to promote yuan-based gold trading and settlement globally. Driven by China’s long-term aims such as broadening yuan-use, improving resilience, and reducing reliance on the US dollar, the initiative will likely see gradual progress but continued commitment.
Targeting countries across BRICS and the Belt and Road, the initiative also aligns with Beijing’s trade and diplomatic efforts in the Global South.
The Gold Road’s latest initiative aims to establish a global network of gold vaults that supports gold trading in yuan and yuan conversion into gold stored in the vaults. As more such vaults open in partner countries, they would form a multilateral network for yuan-based gold trading, conversion, and custody outside the US dollar.
The first such offshore vault was launched in Hong Kong in 2025, along with two yuan-based gold contracts that settle in cash or physical delivery, including to the new vault.
Other potential locations reportedly include regional gold trading hubs such as Singapore, Kuala Lumpur, Dubai, Riyadh, Moscow, and others.
Set up behind China’s first offshore vault in Hong Kong
The SGE’s first offshore vault is located at the Hong Kong International Airport Precious Metals Depository. Owned and certified by the SGE and operated by the Bank of China (Hong Kong) Ltd., the vault has 150 tonnes of initial capacity.
Hong Kong plans to expand the city’s gold storage capacity tenfold to over 2,000 tonnes in three years to create a “regional gold stockpiling hub.”
The depository operates on the SGE’s physical gold warehousing management regime, supported by a centralized clearing system for gold trading. Trial launched on July 7, 2026, this system is managed by the Hong Kong Precious Metals Central Clearing Co. Ltd. (HKPMC).
The gold chase across the developing world
In addition to the renewed focus on gold in China, events since 2022 have also led to a gold chase among central banks and savers across the developing world. We expect these forces to remain in play as global uncertainties continue to arise.
Central bank gold reserve holdings have more than or nearly doubled since 2022 across developed (1.8x) and developing countries (China 2.1x, Africa 2.2x, Asia-Pacific 1.9x, others 2.1x). Much of this increase, however, is driven by the surge in gold prices.
Stripping out prices shows that developed countries largely held on to what they had while developing countries built up their holdings more actively. Since 2022, gold reserves in tonnes among the latter rose 19% in Africa, 18% in China, 5% in Asia-Pacific, and 13% elsewhere, versus a stagnant 0.2% in developed countries.
The need to catch up or keep up
Despite the chase, China’s gold holdings have grown more slowly and remain smaller than most countries as a share of official reserves. In size, it ranks only sixth in the world.
Since 2022, China’s gold holdings as a share of official reserves increased 3.4 percentage points to 6.7% — a far slower rise to a lower level compared to the country medians of Africa (up 13.4 ppt to 17.5%), emerging Asia-Pacific (up 3.8 ppt to 9.45%), and developed markets (up 7.3 ppt to 16.6%).
According to the International Monetary Fund, China’s official gold reserves at the end of 2025 totaled $324 billion in value, which is less than a third of that of the US ($1.14 trillion) and behind that of Germany ($470 billion), Italy ($344 billion), France ($342 billion), and Russia ($327 billion).
According to the PBOC, China’s gold reserves grew by over 40 tonnes in the first half of 2026 — more than double the 19 tonnes in the first half of 2025.
The gold chase beyond central banks
In addition to central banks, individual savers are also driving this global chase. In China, their demand for gold will likely lead to further support for the industry, particularly under elevated uncertainties at home and abroad.
Since 2022, consumer purchases of gold bars and coins have surged while those of gold jewelry have fallen by a similar extent. As the former reflects the desire for savings, and the latter, for luxury spending, we see escalating global uncertainties as the key driver, especially in developing countries.
In China, savers have been facing additional uncertainties from slowing economic growth, rising US tensions, and a five-year-long property downturn that has eroded their savings since 2022.
As a result, they purchased more gold bars and coins, as gold has been promoted as an alternative store of savings since the market development reforms of the 2000s.
Why the stagnant global supply despite surging prices
Under government guidance and robust domestic demand, we expect Chinese gold miners to continue to expand at a faster pace than most of their global peers.
Despite surging prices since 2022, global gold production remained stagnant. This is due to rising mine lead times, mounting capital expenditures (capex), and the cautionary experience from the last down-cycle.
According to an S&P Global Energy study of 232 mines, average mine lead times from discovery to production rose to 17.5 years in the last five years (2020-2025) — nearly double the 10.6 years a decade earlier (2000-2009).
Longer time for exploration, permitting, and financing are the key causes. Lead times for gold (15.9 years) are shorter than nickel (18.1), zinc (17.7), and copper mines (17.5), but not by much.
How Chinese gold miners differ from global peers
China’s top gold miners differ from their global peers in that they operate according to national priorities in addition to economic rationale. They also face a more supportive domestic environment.
Most top Chinese miners are majority or minority-owned by China’s central or local governments. As such, they tend to incorporate Beijing’s key policy aims into their core strategy.
For example, after the 2025 Plan recognized gold’s strategic importance to China, the CEO of Zijin Mining Co. Ltd. emphasized gold as the “anchor of financial stability,” while the CEO of Shandong Gold Group Co. Ltd. committed the firm to “find deposits and produce gold for the country.”
Under export controls, effectively all of the Chinese gold miners’ domestic production is sold in China, where prices tend to be modestly higher than global levels due to import controls and robust demand.
Chinese miners’ gold chase at home and abroad
Given the above, we expect China’s top miners to grow faster than their global peers, leading more to enter the ranks of top global producers.
China’s exploration efforts may provide the country’s miners with more domestic resources. Government guidance to intensify prospecting since the late 2000s led to an unprecedented recent streak of “supergiant” discoveries — rare deposits with over 1,000 tonnes of gold ore.
In production, top Chinese miners have stepped up consolidations at home and acquisitions abroad. Zijin and Shandong Gold, for example, have been active acquirers historically, but the scale of their M&As has grown by multiples since 2022 to billions of US dollars from hundreds of millions in the years prior.
These acquisitions are increasingly global, including countries across Asia-Pacific, Central Asia, Latin America and Africa.
In 2025, China’s domestic gold production rose only 1% to 381 tonnes, while overseas production of the country’s top miners surged 25% to 90 tonnes.
A more certain path in an uncertain world
We expect China to pursue these and other plans for gold as tensions and conflicts continue to arise around the world. These plans incorporate past policy goals as well as new security considerations.
Motivated by the country’s long-term aims to raise economic resilience, reduce foreign reliance, and broaden the global use of the renminbi, these efforts will likely see gradual progress but continued commitment.
Meanwhile, robust domestic demand and the perceived need to catch up or keep up amid a global gold chase will likely support sentiment for further build-up, whether through periodic purchases or continued production expansion.
Top Chinese gold miners are aligned with these aims and supported by improved execution, strong balance sheets, and ample financing. Against the slower growth of their global peers, more are likely to move up the ranks of the world’s top producers.
In the uncertain world ahead, one certainty may be that China’s role in the global gold markets will grow further as these efforts unfold.
Source: https://www.spglobal.com/