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Economic Times
2 days ago
- Business
- Economic Times
Why China's going all in on gold and India isn't, says financial adviser
China is reshaping global gold demand with a bold, state-led strategy to reduce reliance on the US dollar and prepare for prolonged economic turbulence. From directing insurance firms to buy physical gold to encouraging citizens to hold it, Beijing is shifting the financial landscape. Meanwhile, trade tensions and inflation worries are fuelling global gold prices, raising the prospect of gold breaching $3,400 per ounce. In contrast, India's gold policies remain cautious and restrictive. Tired of too many ads? Remove Ads State-led push triggers surge in gold demand Tired of too many ads? Remove Ads Behind the numbers: a two-decade build-up India's gold story: rich in culture, light on policy Markets react to trade talks and tariffs Tired of too many ads? Remove Ads Inflation, bonds and the dollar Can gold really hit $3,400? China keeps buying gold Other metals feel the heat China is stepping up its gold game. As trade talks with the US remain uncertain and inflation lingers, Beijing has launched a sweeping financial strategy to shift its economic anchors from the US dollar to physical gold and the strategic shift was highlighted by Alok Jain, founder of Weekend Investing. In a recent post on X, Jain noted, 'China is encouraging citizens to hold more gold.' He added, 'They know gold has a future,' contrasting China's approach with India's restrictive stance on gold loans and high import March 2025, China took a decisive step. The China Banking and Insurance Regulatory Commission (CBIRC) issued Directive No. 2025-03, which requires all insurance companies to invest at least 1% of their assets — over ¥4.5 trillion — into physical enable this, insurers were granted access to the Shanghai Futures Exchange (SHFE), bypassing global trading platforms. This marks the first time insurance firms have been given such direct entry, according to moves build on a 2024 campaign by the People's Bank of China urging citizens to buy physical gold, which led to a 34% increase in national gold consumption gold accumulation isn't new. Since 2000, it has grown official gold reserves from 395 tonnes to over 2,200 tonnes. But some analysts believe Beijing holds more than 5,000 tonnes, much of it acquired through discreet, off-market aim? Reduce dependence on the US dollar and cushion the economy against geopolitical shocks. And with global uncertainty rising, the plan seems to be gaining by contrast, remains heavily gold-dependent at the household level but lacks a coordinated national gold policy. Indian families, especially women, collectively hold more than 25,000 tonnes of gold — mostly in the form of high import duties and restrictions on gold-backed lending limit broader financial leverage. While the cultural value of gold is high, its strategic utility remains untapped at the policy Tuesday morning, MCX Gold August contracts rose 0.72% to ₹96,475 per 10 grams, reflecting cautious optimism surrounding US-China trade talks in reported that US President Donald Trump had said his administration was "doing well" in the negotiations and received "positive reports from the talks".But the details remain vague. A new framework agreement is in place, building on last month's Geneva discussions, yet both Trump and President Xi Jinping have yet to approve it.'Any positive developments from the talks could provide headwinds for gold prices, while a stalemate in talks is likely to renew the precious metal's appeal,' said Zain Vawda, market analyst at are also eyeing the US Consumer Price Index (CPI) data, due later today. Inflation is expected to stay sticky. A weaker dollar ahead of the data release has already helped lift Kamboj, Vice President of India Bullion and Jewellers Association, said, 'Market participants are closely monitoring the ongoing US-China trade negotiations taking place in London, alongside key inflation data set to be released this week in both India and the US.'She added, 'Attention is also on the upcoming long-term bond auction in the US on Thursday; a weak response could spark renewed interest in gold at lower price levels.'Gold futures rose to $3,350.10 per ounce on Wednesday, while spot gold reached $3,329.70. Analysts see potential for further gains if inflation continues and trade talks stall.'If it does not [fall], then a run toward the $3,400/oz level and beyond starts to look like a real possibility,' said a US court ruling has kept Trump-era tariffs in place. These "liberation day" tariffs, set to kick in by early July, could add to inflation pressures and drive further interest in May, the People's Bank of China added 60,000 troy ounces of gold to its reserves. This marks the seventh straight month of additions, pushing total holdings to 73.83 million troy steady accumulation is a key reason why global gold prices may remain elevated in gold gained, silver futures fell 0.9% to $36.328 per ounce. Platinum surged 3.6% to $1,255.65, and copper dropped 1.4% on the London Metal the US, copper futures also declined 2.3% amid concerns over high tariffs and slowing global is back in the spotlight. China is betting big, not just on cultural affinity but on financial strategy. Trade talks, tariffs, and inflation data will shape the path ahead, but one thing is clear: gold is more than tradition now. It's a play on the Jain put it, "They know gold has a future."
South China Morning Post
27-03-2025
- Business
- South China Morning Post
Former officials call for parity, reform in China's pension system
China should step up the reform of its pension system by improving its sustainability, balancing its funding sources and narrowing gaps in benefits for people from different regions and sectors, former banking officials urged during the Boao Forum for Asia. Advertisement In 2024, the average monthly basic pension payment for urban and rural residents was about 240 yuan (US$33), 'far from enough to cover basic living expenses' according to Guo Shuqing, former chairman of the China Banking and Insurance Regulatory Commission. He made the comments during a panel discussion on Tuesday. 'Could the government consider sustained and substantial increases in the basic pension for residents?' asked Guo, who currently serves as deputy director of the national legislature's financial and economic affairs committee. 'The goal should be to reduce the urban-rural pension disparity from 3.4 times in 2021 to around 2.4 times or lower by 2030,' Guo added. China's pension system currently rests upon three main 'pillars', with most retirees relying on the first pillar, the basic pension fund. Advertisement The second pillar consists of annuities established by enterprises and government employers for their staff. The third and newest pillar is the system of voluntary retirement accounts established for individuals in 2022
