Hong Kong targets 2,000-ton gold to strengthen global trade role

Hong Kong plans to broaden its footprint in the global gold trade, setting out steps to add storage capacity and tighten ties with mainland China as Beijing seeks a larger role in international commodity markets.

In his annual policy address on Wednesday, Chief Executive John Lee outlined actions to restore the city’s profile as a bullion center. The package calls for raising the city’s capacity to hold more than 2,000 tons within the next three years and for setting up a central clearing platform for gold.

The larger buildout replaces earlier, slower plans and signals a push to attract traders and expand refining. Bloomberg reports it is part of a longer strategy to draw Hong Kong closer to the mainland. Lee also asked the Shanghai Gold Exchange to prepare for future two-way market access.

Hong Kong has long served as China’s doorway to overseas bullion markets.

Shanghai Gold Exchange sets up offshore vault in Hong Kong

In June, the Shanghai Gold Exchange, the main venue for physical gold in China, opened its first offshore vault in Hong Kong and introduced two contracts for international investors, a move aimed at reducing reliance on the US dollar and promoting broader use of the yuan in cross-border trade.

With that backdrop, the city is seeking to become Asia’s top trading hub while aligning more closely with Beijing’s goals. Hong Kong’s rules on importing and exporting bullion are lighter than those on the mainland, making it a link between global flows and China’s domestic market, where shipment controls remain tight.

Officials say some specialists from abroad have returned to the local gold business, though state-owned banks and others still face hiring hurdles because skilled workers are in short supply.

Also on Wednesday, the government said it would offer tax breaks for commodity traders and introduce new trading technology to support its long-term commodity plan. Earlier this year, the London Metal Exchange, the marketplace for base metals such as copper and aluminum, approved Hong Kong as a warehouse site for the first time as it seeks a closer connection to mainland China.

Mainland China moves to ease gold import rules

China’s central bank plans to loosen rules on gold imports. It would broaden use of “multi-use permits,” extend their validity to nine months from six, and scrap limits on how many times a permit can be used. The plan would also let more Chinese ports clear shipments.

The timing also favors buyers. A stronger yuan against the dollar makes it cheaper to bring in metal. Easing trade frictions would help jewelers, as Cryptopolitan reported earlier, with strong global interest in bullion pushed prices to record highs. China’s demand is a key force, yet buyers often pay a premium over world prices due to import controls.

“This is a small but meaningful step China is taking to align with international practices,” said Samson Li, an analyst in Hong Kong at Commodity Discovery Fund.

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