China is brewing a great reform over the gold management. Departments concerned are working out plans to replace the old system of "unified purchase and allocation" with a new market-oriented one. Specific measures are to be carried out in the following two phases: first, to open up domestic market on the premise of setting up a gold exchange house, then open the gold market to the outside world.
The basic goal for domestic gold management reform is to gradually loosen the control over gold and open up the gold market. That is to establish a new system for gold production, circulation and healthy consumption by bringing into full play the role of the market in the adjustment of gold resources, a system of opening with improved mechanism under a unified control and orderly competition so as to meet the needs of the development of socialist market economy.
According to related proposals, the specific measures for reform will be carried out in two phases: the adjustment transition and market opening.
The adjustment transition period is from 2001 to 2002, during which the work will mainly be focused on the adjustment of gold policies, thus facilitating the formation of a gold market for the basic realization in opening the gold market under control. During this period, China will first spend one year or so in preparation of relevant policies for the opening-up of the gold market including the establishment of a gold exchange. Secondly, to abolish the old policy of "unified purchase and allocation" of gold and the gold exchange will be put into operation, and the domestic gold transaction will be put under the nationally standardized gold deal system.
Before the introduction of the policy of reform and opening to the outside world in China, the main task for gold and silver management was for adjusting the policy of gold and silver purchase, and encouraging its production, thereby guaranteeing the needs of gold and silver in great amount. It was thus that the unified purchasing and management system was formed.
1982 saw the signs of request for the market-oriented management of gold and the opening of the domestic market for gold-ornaments was then regarded as a signal. However, from 1993 up to now, no substantial measures have been advanced in exception of the gold price that was basically integrated with the international market. The reform has fallen far short of the expectation of the people.
During the recent two years, China has frequently adjusted its gold buying and selling prices. Zhongjin Gold Co. Ltd, the first state-controlled gold enterprise in China, is expected to list soon for financing in the market. All these point to that China's gold industry has stepped out of the planned and closed management mode, and is heading stealthily toward the market.
China's gold market is going to be opened up on the condition that the gold market be perfected and gold transaction, operation, supervision and management be normalized. Some relevant measures to be adopted are that the gold can be imported and exported freely, allow commercial banks, domestic and foreign, to trade on gold bars and ingots, to go in for gold finance, deposit and loans and other businesses. And the gold exchange house can in somewhat way carry out the gold futures.
Financial sources say that gold management reform is a systematic project. It has many things to do with various aspects, and China has something specific to deal with, and so the gold management reform can not be fulfilled at one go.
(People's Daily 10/10/2000)
