| 15 November 2000
China - Further progress in market deregulation
2000 China Gold Economic Forum release action
plan to deregulate China's gold market
The 2000 China Gold Economic Forum, organised by the World Gold Council
in Beijing on 26 October, released a research report titled China's
Gold Market Reform in a New Era - Related Policy Research and Suggestions.
Commissioned by the WGC and conducted by the renowned Chinese economist
Dr. Liu Shijin of the Industrial Economics Research Department, Development
and Research Centre (DRC), the think-tank of the State Council of the
P.R.C., the research study delves into the gold production and circulation
systems in China, with a major focus on the establishment of a gold exchange
market.
Impressive list of local and foreign participants
Over 200 key participants attended the Forum, including representatives
from government, regulatory bodies, gold mining companies, the jewellery
trade and financial institutions from China and overseas. It was co-organised
by the Bureau of Currency, Gold & Silver Administration, The People's
Bank of China (PBC) and DRC, supported by the Gold Bureau, State Economic
and Trade Commission and sponsored by AngloGold.
The Forum was chaired by Terry Smeeton, former head of the foreign exchange
division of the Bank of England, and supported by presentations on key
gold markets of the world by Robert Guy, Director, N.M. Rothschild, Ian
MacDonald, Vice-President and Manager of precious metals, Commerzbank,
New York, Fung Chi Kin, President, Chinese Gold and Silver Exchange Society,
Takeo Umezawa, President, Sumisho Precious Metals, and Mark Lynam, Treasurer,
AngloGold.
National gold exchange market a significant step towards opening China's
gold market
The research report sets out the position that "to reform or not to reform"
is no longer a pertinent question, but rather how to reform in the most
desirable way, and how the process should be accelerated. Highlights of
the proposed action plan include:
- Withdrawal by the PBC from its monopoly position in the purchase
and allocation of gold.
- Establishment of a nationwide gold exchange market in order to create
a highly creditworthy and transparent market environment.
- Accommodation of other market mechanisms such as an inter-bank OTC
gold market, regional gold exchange centres and a retail gold market,
seeking ultimately to align with mature international markets;
- Matching of supply and demand, lowering transaction costs, avoiding
and diverting price risks and following international price structures;
- Greater role for commercial banks in gold distribution and services
for gold producers and downstream operators;
- Suggested sequence of initial opening of a retail market followed
by wholesale and other related businesses.
- High priority to favourable tax policy, including preferential VAT
to legally traded raw material, abolition of the 5% consumption tax
on gold jewellery, application of the 17% VAT only to the value-added
part, tax preferences to investment gold products, and reducing tariff
rates on gold jewellery, imports.
- Reduced government intervention and introduction of self-regulatory
framework, through a committee of representatives from the PBC, gold
experts and relevant ministries.
National gold exchange market to be established in Shanghai?
A Shanghai location was supported at WGC's "Gold Virtuosi" gala night
in Shanghai on 28 October by Mr. Huang Qi Fan, Vice Secretary-General
of the Shanghai Municipal Government, who in a public address stated "Shanghai
will strive to set up a national gold exchange market before the end of
the year. It will follow the practice of international gold exchange markets
and the World Gold Council will be invited to provide advice and consultancy."
WGC's role well acknowledged
The WGC's strategic role and major initiative in accelerating China's
gold market reform was well acknowledged by the PBC, the related government
bodies and the gold industry. There is no reason to doubt that deregulation
will significantly stimulate demand for gold, both in jewellery and investment
forms, in China.
For full Pdf report - China
Gold Gold Economic Action Plan
( pdf- 92 kb,
33 pages) |