China says no time frame on giving out more gold import licenses

HONG KONG: China's central bank has not set a timeframe on issuing more gold import licenses to banks, but is keen to further open up the market to the international community, a senior official said on Monday.

"Later on, we will further open up the market and quicken the steps to integrate into the international market," Xie Duo, general director of the financial market department of the People's Bank of China, told a precious metals industry conference in Hong Kong.

"We should actively create conditions for the gold market to become integrated with the international gold market." Xie did not provide details. China is on course to surpass India as the world's top gold consumer this year, as a weaker rupee and higher import tax weigh on Indian buying interest.

But the Chinese central bank has not set a schedule for issuing more import licenses, Xie told Reuters on the sidelines of the conference.

Beijing strictly regulates gold import and export and has so far only given licenses to nine commercial banks, including Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China and China Construction Bank.

Xie said the bank's policy was to encourage residents to hold physical gold. He declined to comment on the central bank's own gold buying activity.

China's gold market was expanding because of strong domestic demand for the metal, Xie said, while the country's banks were increasing their gold trading on the domestic over-the-counter (OTC) market.

Chinese banks are also allowed to trade gold on the international OTC markets for their own books but not allowed to trade on behalf of their clients, Xie told Reuters.

For now, the central bank had no plan to look into when and how China would allow commercial banks to trade gold through the international OTC markets for their clients, Xie said, adding, "That is not the development direction."

China has official gold reserves of 1,054.1 tonnes, the world's sixth-largest, which account for under 2 per cent of its total reserves, according to the World Gold Council. Top gold holder the United States has more than 76 per cent of its reserves in its 8,133.5 tonnes of gold holdings.