China to consider more forex reserves investment in gold
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China said Tuesday it will consider investing more foreign exchange reserves in gold "cautiously" based on market conditions, noting at the same time gold is unlikely to be a major channel of investment.
Yi Gang, head of the State Administration of Foreign Exchange and vice governor of the People's Bank of China, made the remarks at a press conference on the sidelines of the annual session of the National People's Congress, the top legislature.
The current official gold reserves of more than 1,000 tonnes takes up only one percent of the total foreign reserves, according to Yi. The proportion will not increase significantly even if the current reserves are doubled, Yi said.
In addition, Yi noted, to increase gold investment will also push up prices and affect people's life, which should also be taken into consideration.
The big fluctuations of gold prices over the past three decades also suggest that investment in gold actually does not always give good yields, said Yi.
Gold sold at more than 100 yuan a gram in China a few years ago, and the retail price later climed to top 200 yuan and is now approaching 300 yuan a gram, according to Yi.
China is the world's biggest gold producer and the second largest consumer second only to India. It's annual output stands at more than 300 tonnes, and consumption is over 400 tonnes, Yi said.
China's official holding of gold hit 1,054 tonnes last year, the fifth largest in the world, but at least 3,000 tonnes are privately held, Yi said.
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