Shandong Province in east China, which produces 25 percent of China's gold, is being heavily affected by price fluctuations on the world gold market, according to November 28's China Daily.

China has been able to produce more than 150 tons of gold in recent years, making it the fifth-largest gold producer in the world even though the gold industry is still tightly controlled by the central government.

However, the price fluctuations reduced income to Shandong's gold miners by about 1 billion yuan per year. About 90 percent of its gold enterprises fell into great difficulties.

The State purchases gold at prices set by the People's Bank of China and sells to gold processing enterprises also at fixed prices. To support the gold industry , the State increased the gold purchase price from 48 yuan (5.78 US dollars) to 96.48 yuan (11.62 US dollars) per gram in 1993. However, the bank has reduced prices seven times since 1997 in response to fluctuations on the international market, with a total 25 percent price decrease.

The world gold market suffered the lowest prices in July since 1970. It, however, climbed by 27.8 percent between September and October. In China, the gold prices increased from 69.6 yuan to 85. 2 yuan per gram in October.

The industry is placing emphasis on the development of non-gold sectors in the province. It has set up more than 300 enterprises engaged in the manufacturing of machinery, electronics and building materials as well as hotel business. (Xinhua)