News / Economy

Sources: China Grants Gold Import Licenses to Foreign Banks for 1st Time

FILE - Customers buy gold accessories at a gold store in Taiyuan, Shanxi province.
FILE - Customers buy gold accessories at a gold store in Taiyuan, Shanxi province.
TEXT SIZE - +
Reuters
— China has granted licenses to import gold to two foreign banks for the first time, sources said, as moves to open the world's biggest physical bullion market gather pace.
 
Allowing more banks to import gold could increase the supply of the metal into the country, easing local prices, which are higher than in most Asian nations.
 
China's gold imports more than doubled last year to over 1,000 tons - ousting India as the biggest buyer - as demand soared to unprecedented levels due to the first drop in international prices in 12 years.
 
ANZ and HSBC were awarded import licenses late last year, according to two sources with direct knowledge of the matter.
 
Other trading sources said China Everbright Bank has also received approval to join the nine local banks already allowed to ship gold into China. Beijing strictly controls how much the banks import through a quota system.
 
“China is actually increasing its transparency. I think there will possibly be further access to other banks as well,” said Cameron Alexander, manager of Asian precious metals demand at metals consultancy GFMS, which is owned by Thomson Reuters.
 
China faced a supply crunch early in 2013 when a sharp plunge in gold prices released pent up demand that eroded inventories at banks and jewelry sellers.
 
Premiums in China tend to be higher as supply is tighter than other parts of Asia due to the quota system and the limited number of import licenses.
 
Premiums are currently about $15 an ounce over London prices, compared to less than $2 in Singapore and Hong Kong. Premiums rose to a record high of $30 in April-May last year.
 
China imported 1,060 tons of gold from Hong Kong in the first 11 months of 2013. Beijing does not release gold trade data, so numbers from Hong Kong - the main conduit for gold - provide the best estimate on imports.
 
However, traders warned that the award of the new licenses did not necessarily mean imports would jump sharply from 2013's record volumes, as the level of demand would be the main factor driving shipments. They also pointed out that the move indicated appetite for gold would likely be strong.
 
In 2011, ANZ and HSBC became the first two foreign banks to get the green light to trade gold futures on the Shanghai Futures Exchange.
 
ANZ is the only foreign bank on the list of 10 most-active members by volume on the Shanghai Gold Exchange (SGE), the physical trading platform in China.
 
String of changes
 
The granting of new licenses is the latest in a string of steps by China to ease restrictions on bullion trading and boost market accessibility.
 
China approved its first gold-backed exchange-traded funds last year and extended trading hours on the futures exchange.
 
The central bank issued a draft policy document in September that proposed letting more banks import and export gold.
 
The move also comes as the SGE plans to launch gold futures in the city's pilot free trade zone this year. Those futures would be open to foreign investors.
 
“China will need to allow more foreign players into the physical gold market if it's planning to have foreign investors participate on its gold futures,” said one of the sources.
 
“This is the first step that the regulators are taking to ensure that its gold futures contract in the free-trade zone can take off.”

You May Like

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Turkish Law Gives Spy Agency Controversial Powers

Parliament approves legislation to bolster powers of intelligence service, which government claims is necessary to modernize and deal with new threats Turkey faces More

Video Face of American Farmer Changing

Average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Face of American Farmer is Changingi
X
Mike Osborne
April 18, 2014
The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.