According to data on every country’s gold reserves recently issued by World Gold Council (WGC), the United States’ gold reserves are 8,133.5 tons, accounting for 26.49 percent of the world’s total, and the United States is still the largest gold reserve country. China’s gold reserves are a little more than 1,054 tons, ranking sixth in the world.
Although China’s gold reserve is not less in quantity, it accounts for only 1.6 percent of China’s total foreign reserves. In comparison, the Untied States’ gold reserves account for 74 percent of its foreign reserve, and even emerging countries including Russia and India have gold reserves accounting for more than 5 percent of their foreign reserves. Insiders said that it is good for emerging economies to hold more gold reserves. It is the trend that the Central Bank of China will hold greater gold reserves.
In fact, before Standard and Poor’s downgraded the U.S. credit rating, the central bank of every country already started to gradually increase their gold reserves because of the European and U.S. debt crises and the declining confidence in the U.S. dollar and Euro.
People have noticed that the countries that dumped gold in the past 20 years actually turned into net gold purchaser in 2010 because they want to realize foreign reserve diversification and reduce dependence on the U.S. dollar.
According to data issued by the WGC, governments of all the countries have purchased a little more than 203 tons of gold in 2011, three times as much as the gold they purchased in 2010. It indicates that every country is more and more regarding the gold as a tool for resisting the depreciation of paper money and global economic turbulence. Currently, China’s foreign reserves are definitely the largest in the world, but China’s gold reserves are still far less than the global average level.
Gold reserves support national credit
Jing Naiquan, head of the China Gold Investment Research Institute, said that the major role of gold is its stable value amid crisis. Holding gold can reduce the shrinkage of wealth and avoid the exchange rate risk in the foreign exchange market. Furthermore, state governments will likely face debt crisis after the international financial crisis. Thus, if a state government holds a certain proportion of gold reserves, it can use them to pay back debt.
Therefore, gold is of great significance to preserve a country’s financial security. The United States holds about 8,100 tons of gold reserves; Germany, 3,400 tons, and France and Italy each, 2,500 tons. These countries have paid high costs for their gold reserves, showing that they have drawn particular attention to the strategic importance of gold reserves.
Although it is necessary for China to raise the relatively low proportion of gold reserves, many experts said that now is not the right time to do it. China can buy gold after market corrections. Many other people have also made suggestions about investing more foreign exchange reserves in gold.
The State Administration of Foreign Exchange recently responded that the commodities such as gold, silver, oil and m
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China needs caution in drive to up gold reserves
China is the world’s largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes.
Livestock raising on a large scale is confined to the border regions and provinces in the north and west; it is mainly of the nomadic pastoral type.
Coal is the most abundant mineral (China ranks first in coal production); high-quality, easily mined coal is found throughout the country, but especially in the north and northeast.
China’s leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt.
In addition, implementation of some reforms was stalled by fears of social dislocation and by political opposition, but by 2007 economic changes had become so great that the Communist party added legal protection for private property rights (while preserving state ownership of all land) and passed a labor law designed to improve the protection of workers’ rights (the law was passed amid a series of police raids that freed workers engaged in forced labor).
Most of China’s large cities, like Shanghai, Tianjin, and Guangzhou, are also the country’s main ports.