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China is betting on gold
Beijing plans to increase its official gold reserves to 8,5 thousand tons, Vesti reported with reference to Sun Xin, head of China Gold Association, general manager of China National Gold Group Corporation and party secretary.
Officials are confident that gold will give China an advantage in any circumstance and help support the process of bringing the yuan to the status of an international currency, since "gold forms a solid material basis for modern fiat currencies."
The confirmed strategy of the Chinese Communist Party implies active accumulation of gold in reserves and stimulation of individual investments in gold in order to strengthen the Chinese economy and protect against external and internal shocks.
Experts believe that China is probably understating the real figures of the demand for gold in order to hide the true deficit. The actual Chinese wholesale demand for gold in 2013 amounted to 2,197 thousand tons, according to various sources.
The main goal is precisely the internationalization of the yuan. Such a "Chinese dream" can be realized if the trend towards a stronger role for China in the world economy and trade continues.
From this point of view, the country's gold and foreign exchange reserves are very small. The nominal volume of gold around the world is about 30 thousand tons, while the United States has 26% of the world volume - 8,134 thousand tons. Germany still has almost 3,4 thousand tons, while Italy and France have more than 2,4 thousand tons.
China has only 1,054 thousand tons, which is only 3,4% of the total world volume. As a percentage of the country's total reserves in the US, gold is 71,7%, in Europe 40-70%, and on average around the world about 10%. At the same time, China's indicator is only 1%.
That is why China set as its goal a significant increase in gold reserves. At the first stage, they are expected to increase to 4 thousand tons in order to overtake Germany and take second place in the world, and then 8,5 thousand tons will be accumulated, which will exceed the US indicator.