China has increased it’s gold imports in December, according to the latest figures published by the Hong Kong Census and Statistics Department. Gross gold imports through Hong Kong amounted to 126,64 tonnes, an increase of 18% compared to the month of November. Net import – deducting the amount of gold shipped back from China to Hong Kong – increased from 76,39 tonnes in November to 94,54 tonnes in December. This is an increase of more than 23% on a month to month basis.
The increased imports in December could be explained by an increase in inventory due to the Chinese New Year. On the last day of January, Chinese celebrated the Year of the Horse. Many Chinese regarded this as a good time to buy some gold. Prices were also down in December, adding to the demand.
Gross gold imports from Hong Kong to China in 2013 and 2012
Gross versus net gold imports from Hong Kong to China
China doubles gold imports
China imported twice as much gold through Hong Kong in 2013 as they did in 2012. Last year, total net import amounted to more than 1.128 tonnes of gold, more than double the 557,7 tonne imported in 2012. Gross imports rose from 834,4 tonnes in 2012 to a record 1.496,82 tonnes in 2013, an increase of almost 80%.
While China imports the majority of it’s gold through Hong Kong, it is not the only channel. There is also a substantial amount of gold entering China directly through Shanghai. However, the Hong Kong import figures give a good estimate on the development of Chinese gold demand in the last couple of years.
According to analyst Victor Thianpriya from the Australia New Zealand Banking Group (ANZ) we can expect even higher gold import figures for January. This is not only because of the Chinese New Year, but also because many Chinese believe the goldprice will not drop much further.
China overtakes India
India was the largest importer of gold for years, but the Chinese managed to overtake India last year. India has to deal with a balance of payments deficit, caused by the import of both oil and gold. To stop the rupee from declining further, the Indian government and central bank restricted the import of gold. While the smuggling has increased since, official imports came down significantly. In China on the other hand, the government is promoting the ownership of physical gold among the people. China and India combined account for almost half of the world annual demand for physical gold.