Chinese Gold Company Set Up as Government Moves Toward Deregulation
August 10, 2000 - 0:0
TEHRAN China's first shareholding gold company has been set up as the government moves toward deregulation of the world's third largest market for the precious metal, AFP quoted state media as saying on Wednesday.
The new company, Zhongjin Gold Co., is 88 percent owned by China National Gold Corp., while the rest is held by a unit of the China International Trust and Investment Co. and five other firms, the China Daily reported.
While the government will continue to hold a major stake in the new company, "it is a very important step toward relaxing the central government's tight control on the gold industry," said Wang Dexue, an executive with state-owned China National Gold Corp.
Zhongjin wants to sell high-quality gold to local consumers, engage in gold processing and conduct trade on the world's mineral markets. It aims to have a domestic stock listing within the next year to fuel its expansion plans.
China's gold market has been dominated by a state monopoly since the communists came to power more than 50 years ago, but the government has claimed it wants to liberalize the market as it does not have enough money to invest in the industry itself.
China invested just 400 million yuan ($48 million) in gold prospecting and mining in the first half of this year, compared with annual investments of two billion yuan ($240 million) until the mid-1990s.
The next step in the deregulation of the gold market will be the establishment of a gold exchange, along the lines of the silver exchange which formally opened in Shanghai in late June, after a six-month trial.
It is unclear when the gold exchange will be set up, as some reports have set 2001 as the earliest possible date, while other official media have suggested it could happen late this year.
China wants to upgrade its gold industry, which has been coddled for decades by special government treatment, including low-interest loans, subsidies and tax exemptions.
China mined 74 tons of gold in the first half of this year, but the production is divided up among hundreds of small and often inefficient mines using out-of-date technology.
This year, China has shut down almost 20 percent of more than 1,200 mines across the country, leaving more than 10,000 employees out of work.
Chinese gold consumption last year increased 6.9 percent to 205 tons, making the country the world's third-biggest gold consumer, according to the world gold council, which represents gold producer interests.
Gold demand could continue to expand this year as Chinese customers bought 56.5 tons of gold in the first quarter.
China invested just 400 million yuan ($48 million) in gold prospecting and mining in the first half of this year, compared with annual investments of two billion yuan ($240 million) until the mid-1990s.
The new company, Zhongjin Gold Co., is 88 percent owned by China National Gold Corp., while the rest is held by a unit of the China International Trust and Investment Co. and five other firms, the China Daily reported.
While the government will continue to hold a major stake in the new company, "it is a very important step toward relaxing the central government's tight control on the gold industry," said Wang Dexue, an executive with state-owned China National Gold Corp.
Zhongjin wants to sell high-quality gold to local consumers, engage in gold processing and conduct trade on the world's mineral markets. It aims to have a domestic stock listing within the next year to fuel its expansion plans.
China's gold market has been dominated by a state monopoly since the communists came to power more than 50 years ago, but the government has claimed it wants to liberalize the market as it does not have enough money to invest in the industry itself.
China invested just 400 million yuan ($48 million) in gold prospecting and mining in the first half of this year, compared with annual investments of two billion yuan ($240 million) until the mid-1990s.
The next step in the deregulation of the gold market will be the establishment of a gold exchange, along the lines of the silver exchange which formally opened in Shanghai in late June, after a six-month trial.
It is unclear when the gold exchange will be set up, as some reports have set 2001 as the earliest possible date, while other official media have suggested it could happen late this year.
China wants to upgrade its gold industry, which has been coddled for decades by special government treatment, including low-interest loans, subsidies and tax exemptions.
China mined 74 tons of gold in the first half of this year, but the production is divided up among hundreds of small and often inefficient mines using out-of-date technology.
This year, China has shut down almost 20 percent of more than 1,200 mines across the country, leaving more than 10,000 employees out of work.
Chinese gold consumption last year increased 6.9 percent to 205 tons, making the country the world's third-biggest gold consumer, according to the world gold council, which represents gold producer interests.
Gold demand could continue to expand this year as Chinese customers bought 56.5 tons of gold in the first quarter.
China invested just 400 million yuan ($48 million) in gold prospecting and mining in the first half of this year, compared with annual investments of two billion yuan ($240 million) until the mid-1990s.