Slowly China is beating India in gold business and the Dragon land is making considerable progress in the yellow metal trade. As part of its strategy to expand the gold business, China has allowed more banks to import and export gold.

This is a signal that the country plans to loosen restrictions on trading of the yellow metal. The People's Bank of China issued an industry guide to further develop its gold market. China is the fifth-largest holder of gold in the world. China will allow more commercial banks to import and export the metal, the central bank said.

China will improve foreign exchange policies of the gold markets and further open the market to overseas players. Overseas banks including HSBC and Standard Chartered are members of the Shanghai Gold Exchange. The central bank has asked the Shanghai Gold Exchange, Shanghai Futures Exchange and commercial banks to engage more actively to develop a national gold market.

China is steadily opening up its gold market, including setting up a bourse allowing individual to trade bullion and encouraging banks to offer gold investment products.

The Shanghai Gold Exchange, China's sole bourse for gold and platinum, was set up in 2002, indicating the free trading of gold. Previously, the central bank set quotas.

China holds 1,054 tonnes of gold reserves, following the United States, Germany, France and Italy. China's gold reserves account for less than 2 percent of its foreign exchange reserve.

The World Gold Council said earlier that China's consumer gold demand is set to double in tonnage over the next decade as the economy rises.

In 2009, total consumer demand for gold in China grew 7 percent to 461.9 tons, worth more than US$14 billion, equal to 11 percent of global gold demand.

Over the past five years, consumer demand for gold has risen at an average rate of 13 percent annually in China.

China doesn't officially disclose imports of gold bullion. The modernization of China's economy has spurred demand for more complex financial instruments. Expanding the conduit for transactions in gold would benefit local traders and may encourage domestic purchases, a boon for China's miners. China is the world's biggest gold producer.

This statement addresses areas that the industry has widely regarded were blind spots in how the government has viewed the sector. China's gold lobby has long pressured Beijing to raise its gold holdings.