China's Gold Imports Alarmingly High

On Wednesday, Hong Kong reported that their gold imports reached record heights this month as investors rushed to the precious metal before the Lunar New Year – a weeklong holiday beginning on January 23 – in order to "hedge against financial turmoil."
According to Bloomberg:
Demand for gold is climbing in China as investors seek to protect their wealth against slumping property prices and equity markets amid an inflation rate above 4 percent. The nation overtook India in the third quarter as the largest gold jewelry market, according to the World Gold Council. The country is also the biggest producer. Bullion rose as much as 0.9 percent to $1,647.45 an ounce today, the highest since Dec. 13.
Ten years ago, China became part of the World Trade Organization and they've grown quite rapidly in the past decade.
They've succeeded in doing so by exporting relatively cheap goods. At the same time, the Yuan has been “closely pegged to the Dollar - ensuring that devaluation by the US Fed can't price Chinese goods out of the market.”
Growth is now a bigger policy concern than inflation for Beijing. Therefore, it is unlikely that the Yuan will rise at all; conversely, it will probably fall.
Presently, there are now fears that the extremely high levels of gold imports could negatively affect China's trade surplus.
China's private gold savings is rivaled only by India:
china gold
Unwinding China's newly-enabled love of physical gold would be equally disastrous, politically, as well. But is it mere coincidence that, just ahead of the traditionally strong gold buying season of Lunar New Year, Bejing moved to shut down all gold trading exchanges other than the officially-recognized Shanghai Gold Exchange and Shangai Futures Exchange?
A neatly controlled and officially approved gold rush has been very welcome to date. Any hint of panic buying, in contrast, might perhaps remind Beijing just a little too much of what's been happening in the neighbouring, gold-heavy and equally Communist state of Vietnam.

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