China holds the crown as gold producer and consumer

China's rise as the largest producer and consumer of gold worldwide was highlighted by statistics in the 30 years of Gold Demand Trends report by the World Gold Council, ThePaper reported on Wednesday.

In 2022, it was estimated that China accounted for 10 percent of the world's total gold production and it has been the world's largest gold producer since 2007, according to the WGC's report released on Tuesday.

China has also maintained its position as the world's largest gold consumer since 2013, with its annual gold consumption having expanded five times from a little over 375 tons in the early 1990s to a record high of 1,347 tons in 2013.

The gold jewelry market in China has witnessed a remarkable growth trend. In 2013, demand for gold jewelry peaked at 939 tons, an increase of 328 percent in ten years.

China accounted for over 27 percent of the total global demand for gold jewelry in 2022.

China has also seen its gold bar and coin markets ballooning, with demand for the bars and coins growing from 12 tons in 2004 to 218 tons in 2022.

China's gold consumption demand has averaged around 945 tons annually over the past decade, a 30 percent share of the global total, indicating that it has become a key part of the global market.

The People's Bank of China, China's central bank, has added 1,616 tons of gold to its reserves over the last 30 years.

By the end of 2022, the central bank's total gold reserves had reached 2,011 tons, after adding a total of 62 tons of gold reserves in the last two months of 2022, according to another report by WGC, named the 2022 Gold Demand Trends report.

The move marks the first time since September 2019 that the Chinese central bank announced an increase in its gold holdings after 38 months.

Demand for gold bars and coins in the Chinese market totaled 218 tons in 2022, a 24 percent decrease compared to the last year, while demand for gold jewelry currently sits at 571 tons, a 15 percent year-on-year drop.

However, demand for gold globally jumped 18 percent in 2022 to 4,740.7 tons, the highest annual total demand since 2011. Among them, 1,136 tons of annual gold purchases were made by central banks worldwide, the report shows.

The decline in Chinese gold demand was only a temporary result of certain conditions and is set to rebound soon, said Louise Street, a senior markets analyst of the World Gold Council.

Positive seasonal factors in the first quarter of 2023 and strong central bank demand for gold are expected to help China keep its position as the world's top gold consumer in 2023, Louise added.

China's demand for gold jewelry, bars, and coins is expected to bounce back in 2023, as the Chinese economy is set to recover following the optimization of the pandemic policy coupled with a likely consequent rise in disposable income of Chinese households, said Wang Lixin, regional CEO of the WGC (China).

This boost in gold demand will also be supported by the focus of commercial banks on gold sales, and the growing willingness of investors to purchase gold as an effective and stable store of value, Wang added.