BEIJING (Commodity Online): Gold is glittering in China, the largest producer and second biggest consumer of the yellow metal in the world. There is a gold buying frenzy across China that the yellow metal is becoming the best investment bet in the country.
According to a report from the World Gold Council (WGC), China has emerged as the largest and fastest growing consumer of gold in the world, overtaking India. Currently, though India is the biggest gold consumer, growing demand and increasing appetite for the yellow metal in the Chinese rural areas and towns are making the dragon country a truely 'golden country.'
The WGC report said China's gold demand will double over the next decade due to jewellery consumption and investment needs. The apex gold body said that though currently the world's second-largest gold consumer after India, China is gearing to become the largest gold consumer soon.
Gold demand in India has grown at an average rate of 13 percent per year over the past five years, it said.
WGC said demand from China's two largest sectors -- jewellery and investment -- reached a combined total of 423 tonnes in 2009, with 314 tonnes supplied by domestic mines.
This shortfall creates a snowball effect as China's gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world's largest gold producer since 2007, WGC said in the report.
We are actually very conservative, the WGC's Far East managing director Albert Cheng told Reuters in an interview.
The growth is based on the wealth accumulated by the Chinese population. The more important thing is that Chinese central policy is more looking inward at domestic consumption, expanding into the west to bring them up to the level of a coastal city.
The WGC report said China's per capita consumption of gold jewellery is one of the lowest, at 0.26 grams, when compared with other major gold consuming countries. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by at least 100 tonnes or as much as 4,000 tonnes in the jewelry sector alone, it said.
Cheng estimated China's total stock of gold at about 5,000 tonnes and said the figure was low because Chinese people had only been allowed to buy gold in the last 20 years.