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The abolition of barriers affecting gold purchases and gold product processing and distribution on Monday has been hailed as a significant step by the government to liberalize the domestic gold market, following the establishment of the Shanghai Gold Exchange last year.
The removal of barriers will usher many more players into the market, which has been tightly controlled by the central government, said Roland Wang, a Beijing-based manager of the World Gold Council.
"The mounting market competition will bring sweeping changes to the industry," Wang told China Daily yesterday.
The People's Bank of China, the nation's central bank, on Monday announced that companies interested in purchasing, processing, wholesaling and retailing gold would no longer need approval from the official body.
Under previous regulations, any companies wanting to engage in these activities had to apply to the central bank for examination and approval.
"The abolition of this barrier is good news for gold product processors and dealers," said an executive of the Shanghai Gold Exchange.
Many processors and dealers are hoping to become members of the gold exchange, which was set up last November, according to an executive, who asked not to be named.
Currently, the gold exchange has 108 members limited to spot transactions.
With the launch of the exchange, the central government ceased purchasing gold directly from mining companies. Previously, domestic gold firms had to sell all of their gold to the central bank.
"We are very pleased with the abolition of the barrier," said Wang Zhixiao, executive vice-president of the China National Gold Corp, the State's biggest gold mining company.
"The move will enable us to enter into gold product processing and distribution sectors," said Wang Zhixiao.
The company, a member of the Shanghai Gold Exchange, will spare no efforts to expand its interests, he said.
"Consumers will benefit a lot from the abolition of the barrier because categories and quality of gold products in China will be improved significantly as a result of increasing market competition," said Roland Wang.
The categories and quality of gold products made in the Chinese mainland lag far behind those from overseas due to the government's tight control of the market, according to Roland Wang.
Official statistics show China's gold output stood at 189.8 tons last year.
(China Daily April 2, 2003)
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