China, world's largest producer of gold, is buying millions of kilograms of precious yellow metal due to...
Sat Feb 15 2025
China Gold Reserves: China, the world's largest producer of gold, is reportedly buying millions of kilos of gold, acquiring a whopping 29 tonnes of gold in 2024 till December, according to a report by World Gold Council. Here's why China is accumulating gold reserves despite being the world's top producer of the rare earth metal.
Why is China buying more gold?
According to experts, China is accumulating a massive gold reserve to insulate its economy from the fallout any future trade with the United States. China believes that bolstering its gold reserves will help the country to reduce dependence on the US dollar in its foreign exchange reserves.
Notably, US President Donald Trump has announced that he would impose heavy tariffs on goods imported from China, and experts say that Beijing may have predicted that Trump would restart his trade war against China if he is elected to office again. Thus, Beijing began to accumulate gold as early as 2022, to act as a bulwark against Trump's policies.
China fears that if the trade war with the US deepens in the future, its dependence on the US dollar may harm its economy, thus Beijing is increasingly investing in gold and gradually reducing its USD reserves.
Another major reason that experts have speculated behind China's bullion buying frenzy is the toll exacted by the Covid-19 pandemic on the Chinese economy, which triggered concerns about the country's economic growth rate as inflation flattened, settling at zero, leading Chinese banks and the government to invest in gold.
According to reports, China has been buying large amounts of gold since 2022, with China's central bank led by the Bank of China (PBoC), increasing its gold purchases by 30 percent in 2023. As per the WGC report, China was the largest buyer of gold in 2023, purchasing a staggering 225 tonnes, taking its gold reserves to 2,235 tonnes.
Notably, China ranks at the top in gold production, globally, producing 378.2 tonnes in 2023, followed by Russia (321.8 tonnes), Australia (293.8 tonnes) Canada (191.9 tonnes), and United States (166.7 tonnes), in 2023, as per the WGC report.
Recently, China reportedly discovered the world's largest gold reserve in Hunan province. According to Chinese state media, approximately 1,000 metric tons of high-quality ore, worth a whopping $83 billion were found in Pingjiang County in Hunan province, making it the largest gold reserve ever discovered in recorded history, surpassing the previous record of 900 metric tons, held by the South Deep mine in South Africa.
However, despite being the world's largest producer of gold, China lags behind several nations in gold reserves, a list which is headed by the US, with 8,133.46 tonnes in reserves in 2024. Germany has second largest gold reserves at 3,351.53 tonnes, followed by Italy (2451.84 tonnes), France (2436.97 tonnes), Russia (2335.85 tonnes).
China ranks sixth on the list of countries with the largest gold reserves, with 2264.32 tonnes of gold lying in reserve.
Source: https://www.india.com