Is China Buying Gold? Tracking Its Holdings and Motives

The financial community and public closely monitor China’s gold purchasing activities due to its expanding role in the global gold market. Understanding China’s gold strategy offers insights into broader economic trends, shifts in international finance, and its economic policies.

Tracking China’s Gold Holdings

Tracking China’s gold holdings is complex due to the People’s Bank of China (PBOC) reporting practices. While the PBOC provides monthly updates, official figures are often viewed as understated by analysts. For example, in July 2025, official reserves were reported at 2,300 tonnes, marking nine consecutive months of purchases. However, some estimates suggest actual reserves could exceed 5,000 tonnes, as China treats the true extent of its reserves as a strategic secret.

The PBOC consistently increases its gold reserves. Since November 2024, it added approximately 34.2 tonnes, including 1.86 metric tons in May 2025 and 2 tonnes in July 2025. Reported holdings rose 14.7% from 1,948 tonnes in 2019 to over 2,235 tonnes by the end of 2023. These patterns highlight China’s sustained interest in increasing its gold reserves.

Ascertaining the full scope of China’s gold acquisitions is complicated by multiple import channels. Beyond central bank purchases, gold enters through commercial banks and other entities. Hong Kong serves as a significant gateway, but other routes exist through cities like Shanghai and Beijing.

Drivers Behind China’s Gold Acquisitions

China’s gold accumulation is driven by economic and geopolitical factors aimed at enhancing financial resilience. A primary motivation is diversifying its foreign exchange reserves, reducing reliance on the U.S. dollar. This strategy mitigates risks from currency fluctuations and inflation, hedging against global economic uncertainties. Diversifying increases China’s economic autonomy and lessens vulnerabilities linked to holding a single reserve currency.

Financial stability also plays a role in China’s gold strategy. Gold is viewed as a safe-haven asset, especially during global economic and geopolitical instability. Gold accumulation acts as a hedge against external shocks and helps maintain financial system stability. This approach reflects a long-term vision for reserve management, aiming to build a robust financial foundation.

Geopolitical considerations, including de-dollarization efforts, underpin China’s gold purchases. The freezing of other nations’ foreign exchange reserves likely prompted China to diversify its holdings to avoid similar vulnerabilities. This strategic move aligns with efforts to reshape the international monetary system and reduce the U.S. dollar’s dominance. Such actions contribute to a shifting balance of financial power.

Domestic economic conditions also influence China’s gold demand. Weakening local currency and underperforming equity markets have prompted increased investor interest in gold. The China Banking and Insurance Regulatory Commission (CBIRC) mandates insurance companies allocate at least 1% of assets to physical gold. This institutional demand signifies a shift toward investment-grade gold and supports accumulation within the country.

Sources and Flows of Gold in China

China, the world’s largest gold producer since 2007, significantly contributes to its domestic supply. In 2024, China produced approximately 377.242 tonnes, over 10% of the global total. Major gold mining provinces like Shandong, Henan, Fujian, and Liaoning are responsible for much of this output, with Shandong alone contributing over 40% in 2023.

Despite robust domestic production, China relies on international imports to meet demand. Hong Kong serves as a primary conduit for gold entering mainland China. In July 2025, net gold imports via Hong Kong surged by 126.81% from the previous month, reaching 43.923 metric tons. Gold also enters China through other channels, including Shanghai and Beijing.

Once in China, gold flows through several channels. A portion goes to official reserves held by the People’s Bank of China. Commercial banks also maintain gold holdings. Beyond official and commercial holdings, private and consumer demand absorbs a significant amount, including for jewelry manufacturing and investment purposes like gold bars and coins. Recent trends show a shift from traditional jewelry towards investment-grade gold, driven by economic uncertainties.

Global Implications of China’s Gold Strategy

China’s consistent gold accumulation influences the global gold market and financial systems. Its sustained demand impacts global gold prices and market sentiment, given its position as a major consumer. China’s purchasing activities can directly affect market dynamics, contributing to price fluctuations. The country’s control over approximately 40% of global gold open interest means its trading activities can trigger algorithmic responses in Western markets, amplifying its influence.

The diversification of China’s foreign exchange reserves, particularly away from the U.S. dollar, has implications for the dollar’s role as the dominant reserve currency. This shift encourages other central banks, especially in emerging markets, to increase their gold holdings. Such collective diversification could alter the composition of global reserves and reduce reliance on any single currency. This movement signals a reevaluation of traditional reserve assets among central banks worldwide.

In the long term, China’s gold strategy may contribute to changes in the international monetary system. The increasing prominence of gold in national reserves reflects concerns about the stability of traditional reserve currencies. Discussions around gold-backed currency alternatives have gained traction, particularly among nations seeking reduced dependence on the U.S. dollar. These developments suggest an evolution in the global financial architecture, with gold playing an important role in the balance of financial power.