China's official gold production in 2006 was a record breaking 240 tonnes. Since 2001, China's annual gold production has seen a rise from 181 tonnes to current levels with net profits from the gold industry in 2006 at 6.5 billion yuan (850 million USD) -- a 63% increase over 2005 profits. China's National Development and Reform Commission (NDRC) has projected 2007 production to exceed 260 tonnes and is well on track to meet this target with first quarter production up 16 % over the same period last year (56.183 tonnes in Q1 2007).
Domestic demand in China continues to rise as sales of gold and jewellery climb 20 percent per year according to People's Daily Online (Chinese news provider). This demand is being driven by the ongoing economic boom, the deregulation of the gold market, and the emergence of the Shanghai Gold Exchange where Chinese nationals are now free to trade gold bullion on the world market.
The World Gold Council has projected that deregulation could double or triple gold demand in China over the next 5 years. China is expected to rival India as the world's largest gold consumer.
Deregulation of the Mining Sector
It is now easier and more secure than ever for foreign mining companies to operate in China. The Central government has taken bold steps to encourage foreign investment and participation in developing China's mining industry. Some of these steps include:
- Issuance of new mineral law under the Ministry of Lands and Resources;
- Privatization of the mining sector;
- Deregulation of the mining sector, particularly the gold sector;
- Streamlining of permitting and approval processes;
- Granting irrevocable exclusive mining rights to foreign entities;
- Allowing the transfer of mining rights;
- Equal access to geological data for foreign mining companies; and,
- Relaxing rules on repatriation of capital profits