BEIJING: China's central bank is planning to increase the number of firms allowed to import and export gold and will also ease restrictions on individual buyers of the precious metal, according to a draft policy document issued on Monday.
The proposed policy change could boost imports by China, which is expected to overtake India this year as the world's top gold consumer, and where gold normally trades at a premium to London spot prices.
"If it comes into effect, supply into China could increase and (local) prices could ease depending on demand," said a Hong Kong-based precious metals trader, who declined to be named.
The People's Bank of China said on its website (www.pbc.gov.cn) that the new rules would allow bank members of the Shanghai Gold Exchange, as well as gold producers with an annual output of more than 10 tonnes, to apply for import and export licenses.
Trade is currently restricted to just nine banks, while the exchange has 25 bank and financial institution members.
The central bank did not say when the new rules would take effect. In a statement accompanying the policy document, it said the draft rules were designed to "standardise and promote the development of the gold and gold product import and export business and protect the legal rights of practitioners."
All transactions will need to be registered with the exchange, and license holders have a responsibility to ensure that domestic supply and demand remain balanced, the draft document said.
The central bank would continue to maintain control on overall gold export volumes "in accordance with the requirements of state macroeconomic policy adjustments," it said.
"It is part of the new tide of financial deregulation," said Jiang Shu, a gold analyst with Industrial Bank in Shanghai. "In the long term, this is a natural process of relaxing gold import regulations."
A shortage of gold in China earlier this year when a steep fall in international prices sparked a surge in demand could have been a factor in easing the rules, he said.
In mid-April, spot gold posted its biggest two-day drop in 30 years, prompting a rush for gold jewellery, bars and coins in China and across the world. Premiums paid for gold on the Shanghai Gold Exchange jumped to more than US$30 an ounce over London spot prices, traders said.
Demand has since steadied and premiums have eased to around US$7 an ounce.
Under the draft policy, individuals will also be allowed to bring up to 200g (seven ounces) of gold into China from overseas without having to report to customs or pay tax.
Chinese investors have traditionally looked to gold as a safe investment, while gold jewellery is popular for festivities such as weddings.
Members of the public have been invited to comment on the new policy and any objections need to be submitted before Oct. 29, the bank said.
China does not publish gold trade data, but according to figures released by the World Gold Association, the country's imports via Hong Kong reached a new record of 834.5 tonnes in 2012, up 94% on the year – Reuters