Regarded as auspicious gifts, gold jewelry and decorations were some of the hottest selling items around the nation during Spring Festival.

Last November's liberalization of the gold market together with the re-emergence of small-sized gold bullion on the retail market have proved an exciting new investment opportunity for investors.

Beijing's Caishikou Department Store, the capital city's largest gold jewelry and decoration retailer, recorded sales in excess of 20 million yuan (US$2.41 million) during the seven-day Spring Festival holiday (from February 1 to 7), 4 million yuan (US$481,000) up from the same period last year.

Sales of gold products in Guiyou and Sun Dong'an also jumped 38 percent from the previous year's figures.

Wang Chunli, general manager of the Caishikou Department Store, told China Daily that small-sized pieces featuring engraved sheep were the most popular purchases.

Now gold retailers have turned their attention to preparing for the coming Valentine's Day.

"We will promote a series of gold jewelry and decorative pieces based on the theme of love, which is to meet the surging popularity of the international day of love. According to Chinese tradition, the treasured metal symbolizes eternity and faithfulness," said Wang.

Following the liberalization of the gold market last November, China's raw gold transactions began to flourish.

Sources from the Shanghai Gold Exchange (SGE), the country's only gold exchange, revealed that, at the end of last year, China's raw gold trading volume totaled 21,016 kilograms.

The Bank of China topped the list for selling and buying volume, recording 6,034 kilograms worth of trading during two months.

The Industrial and Commercial Bank of China was listed as ninth, reporting trading volume at 1,206 kilograms.

Besides the afore mentioned state-owned banks, the Shanghai Pudong Development Bank launched its gold leasing business last year -- the first time in China since 1949, when the domestic gold market was controlled by the central government.

Lu Wenyuan, secretary-general of the China Gold Association, told China Daily that the active participation of the commercial banks was largely due to growing interest in the market.

So far, 108 units have registered as members of SGE, for the right to take part in on-spot gold trading.

They include 13 commercial banks, comprising state-owned groups, gold jewelry retailers, gold mine operators as well as gold processors.

"Liberalization of the market has brought a new business -- gold trading -- to banks, in other words, it has provided a new revenue channel for them," said Lu.

Liu Shan'en, an expert with the Beijing Gold Economics Research Center, said that the banks trading enthusiasm has been bolstered by a likely change in trading laws, which is set to allow individuals to invest in gold.

(China Daily February 12, 2003)