Gold,jewelery popular in China with hope of anti-inflation (2)

21:52, December 03, 2010      

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However, to Yang and other Chinese, gold is no longer just jewelry with best wishes, but a hopeful anti-inflation tool.

China's economy grew 9.6 percent year on year in the third quarter this year, slowing from its 10.3-percent increase in the second quarter of 2010 and 11.9 percent in the first quarter.

The People's Bank of China, the central bank, hiked the benchmark interest rates in October and raised the reserve requirement ratio for banks twice in a month, indicating the government's concern about rising inflation.

Statistics from the World Gold Council (WGC) said that gold investments in China reached 120 tonnes in the first three quarters of 2010.

Two-thirds of Chinese women regard gold jewelry to be as much an investment as a statement of personal style. Consumers are keenly aware of the value of their gold.

WGC predicted that China's demand for investment in gold was expected to reach 150 tonnes in 2010.

Demand for investment in gold in China was likely to accelerate as Chinese buyers regard gold as an effective tool for maintaining and increasing the value of assets, said Albert Cheng, managing director for the Far East office of the WGC, during China's Fifth Summit on Gold and Precious Metal.

In 2009, gold consumption in China reached 462 tonnes in all sectors. And China's demand for gold increased an average of 13 percent annually over the past five years, making China the world's second largest consumer market for gold after India.

"In spite of severe recession of high-end commodities in global terms, China saw a boom in consumption in the sector. Except for traditional gold and silver, diamond investment demand is emerging in China," said Sun Fengmin, deputy director with Gem & Jewelry Trade Association of China.

Even since 2009, some Chinese had placed large diamonds with high quality on their investment lists. "And it is now a continuous trend of diamond investment," said Sun.

The surging demand for diamonds also put China into the second position in the market after the United States. Diamonds are not only a symbol of love but a new tool to maintain and increase the value of assets.

As the strong demand increases from China, India and other new-economies, Rio Tinto has decided to change its drawing-back strategy to increase the annual diamond output to 30 million carats, said Jean-Marc Lieberherr, general manager for sales and marketing of diamonds for mining giant Rio Tinto.

Rio Tinto predicted that, till 2020, China's diamond jewelry consumption would take 26 percent of the global market, which was only 5 percent in 2007.

Luxury jewelry brands such as Cartier, Tiffany and many others are commonly seen in shopping malls in Beijing, Shanghai or even the second-tier cities.

"It is never a luxury dream out of reach, the middle class in China are able to afford diamond jewelry. It is glittering on my finger now, and might looks brighter in the future as an investment," said Yang.

Source: Xinhua




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(Editor:李牧(实习))

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