China Sets Up New Gold Organization

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Last updated at: (Beijing Time) Saturday, November 24, 2001

China Sets Up New Gold Organization

China Gold Association (CGA) was set up in Beijing Friday. It is considered as an important move for the nation to observegold market rules after having exercised central government control on the precious metal for decades.

China Gold Association (CGA) was set up in Beijing Friday, "China Daily" reported Saturday. It is considered as an important move for the nation to observegold market rules after having exercised central government control on the precious metal for decades, said the newspaper.

Experts said the establishment of the new organization is a strong indication of the overall reform of the control and supervision system for the gold industry. "It is a breakthrough for China's gold sector to set up such a coordinated and cooperative business structure," said the newspaper quoted Cheng Fumin, newly elected chairman of the CGA and also general manager of the China National Gold Corporation, as saying. Cheng said the new scheme would meet the requirements of the World Trade Organization (WTO) and use market principles to manageand supervise the operation of gold businesses.

China is to be formally inducted as a member of WTO on December 11. The establishment follows the announcement of the much-heraldednational gold exchange which is set for a soft opening Wednesday in China's leading financial city of Shanghai ahead of an officiallaunch in January.

The new exchange in Shanghai will replace the People's Bank of China (PBOC)'s role in quoting gold in line with fluctuations on the world market -- a major job used to be done by PBOC to stabilize the market.

According to the provisions of CGA, it will provide a platform and create channels for China's gold producers, processing businesses, wholesalers and retailers to exchange information and link together to promote the development of gold industry in China.

CGA will act as a bridge between the government and gold companies in protecting business interests and providing information, consultancy, coordination and intermediary services for them. Yu Yujuan, deputy head of the Currency, Gold and Silver Administration with PBOC, said CGA will play an active role in helping gold enterprises complete market reform and sharpen their competitive edge during the transition period after China's entry to WTO. It will also be fully involved in market supervision to promotea healthy and sustainable development of the market. PBOC has monopolized the purchase and allocation of gold in China for decades.

Shen Xiangrong, chairman of the Shanghai Gold Exchange and alsovice-chairman of CGA, said the new organization is the fruit of anopen market, and the administration and supervision by an specialized business association may be regarded as an guarantee for a fair and competitive market. The entry of foreign firms to the market will bring advanced operation skills, processing technologies and sales ideas, which might help domestic players progress in a shorter time and stimulate consumption in the market.

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