Gold mining in China has positioned the country as the world’s largest gold producer, with 403 tons mined in 2022. In 2007, China surpassed South Africa, which had held the top position for 101 consecutive years, by producing 276 tonnes of gold compared to South Africa’s 272 tonnes. This shift was primarily due to a 50% decline in South African production over the past decade, rising production costs, stricter safety regulations, and depletion of existing mines.
Contrastingly, China’s gold output had more than doubled since 2000 by 2014, reaching 450 tonnes. The country has witnessed increased foreign and domestic investment in its gold mining industry, leading to a rise in project numbers and discoveries. In 2008, China produced nearly 300 tonnes of gold, making it the only top-three producer with increased production that year. Australia ranked as the second-largest producer with 274 tonnes, followed by Russia with 247 tonnes, while South Africa fell to the 6th position with 152 tonnes.
Key organizations playing a crucial role in China’s gold industry include the China Gold Association (中国黄金协会) and the China International Mining Group (中国国际矿业集团).
Production and Reserves: China holds relatively small gold reserves, accounting for approximately 7% of the world total. Historically, gold production has been concentrated in eastern provinces like Shandong, Henan, Fujian, and Liaoning. However, there has been a recent increase in production in western provinces such as Guizhou and Yunnan, albeit from a relatively small base. Gold mining also takes place in Tibet, specifically in Maizhokunggar County, east of Lhasa.
Foreign Investment: Major foreign investments in China’s gold mining sector have been made by Canada and Australia. While foreign investment has played a crucial role in the expansion of gold mining, the Chinese government ceased actively encouraging it after 1995. Notable foreign investments include
- Vancouver-based Jinshan Gold Mines Inc., which began production in July at the Chang Shan Hao gold mine in Inner Mongolia. The mine aims to produce approximately 120,000 ounces of gold annually, ranking it among the country’s largest producers.
- The Indian Liberty Group, with multibillion-dollar investments, owns two mines in China.
- Gold Fields and Australia’s Sino Gold Mining Ltd. have formed a joint venture focused on discovering large gold deposits in China, with the potential to yield around 500,000 ounces annually. Sino Gold has been acquiring stakes in Chinese gold deposits and explorers, and in May, it initiated production at the Jinfeng Gold Mine in southern China, targeting an annual gold production of 180,000 ounces.
- Dynasty Gold Corp. held a majority share in the Hatu Gold Mine in Xinjiang, the Red Valley project in Qinghai, and the Wildhorse project in Gansu. The Red Valley and Wildhorse projects are situated on the Qilian metallogenic belt.
Demand and Consumption:
The majority of China’s gold production remains within the country, where it is utilized for the creation of jewelry and various manufactured goods. While China’s role as an exporter of gold is expanding, a significant portion is still consumed domestically. In 2007, fabrication experienced an 18% increase, driven by demand from the growing affluent middle and upper classes in China. This surge in domestic demand has propelled China to become the world’s fourth-largest consumer of gold.
Chinese market demand now constitutes 9.2% of global gold consumption, reflecting the nation’s substantial influence on the overall gold market. As China’s middle and upper classes continue to experience rapid economic growth, the demand for gold as a symbol of wealth and a component of luxury goods is expected to persist, further solidifying China’s position as a significant player in the global gold consumption landscape.
largest gold mines in operation in China
GlobalData’s mining database identifies over 1,322 gold mines globally, with 127 situated in China. The five largest gold mines in China for 2022 are:
- Sanshandao Gold Mine (Shandong):
- Owner: Shandong Gold Group
- Estimated Gold Production (2022): 215.94 thousand ounces
- Operation Duration: Until 2027
- Dexing Mine (Jiangxi):
- Owner: Jiangxi Copper
- Estimated Gold Production (2022): 164.41 thousand ounces
- Operation Duration: Until 2050
- CSH Gold Mine (Inner Mongolia):
- Owner: China Gold International Resources
- Estimated Gold Production (2022): 151.77 thousand ounces
- Operation Duration: Until 2027
- Xincheng Gold Mine (Shandong):
- Owner: Shandong Gold Group
- Estimated Gold Production (2022): 142.84 thousand ounces
- Operation Duration: Until 2028
These mines contribute significantly to China’s gold production and reflect the country’s prominent role in the global gold mining industry.
Shandong is China’s largest gold mine
China’s Unreported Gold Reserves: A Hoard 10 Times Larger Than Publicly Stated
China is quietly accumulating gold reserves at a scale ten times larger than officially reported, revealing a clandestine effort by Beijing to amass substantial holdings. Dominic Frisby asserts that China’s secretive gold hoarding is driven by motives that extend beyond what is publicly disclosed.
In spite of China being the world’s leading gold producer, its central bank has taken a prominent role in a substantial surge of international gold purchases, signaling a deliberate move to decrease dependency on the U.S. dollar.
While China produced 375 tonnes of gold in 2022, the People’s Bank of China accounted for 181 tonnes in the first nine months of 2023, out of a global total of 800 tonnes acquired by central banks. With estimated gold reserves of 2,113 tonnes as of July, ranking fifth globally, the Chinese Central Bank has consistently augmented its gold stockpile for 11 consecutive months, now constituting 4% of its declared assets.
Although the full extent of China’s gold holdings remains obscured, experts assert that this increased interest in gold aligns with a broader trend of diversifying away from dollar-based assets amidst financial and geopolitical uncertainties.
July saw the People’s Bank of China emerge as the top gold buyer, adding 23 tons to its reserves for the ninth consecutive month. Year-to-date, China leads in gold purchases, boosting its official reserves by 188 tons, totaling 2,136 tons or 4% of its overall reserves.
China’s history of augmenting reserves and then maintaining silence has led to speculation that additional gold may have been accumulated off the books, possibly within a separate entity like the State Administration for Foreign Exchange (SAFE), as suggested by some analysts.
The motivation behind China’s gold accumulation is a subject of conjecture. Rather than seeking to influence the U.S. economy, experts propose that China’s gold strategy may be an effort to fortify its fiscal position with a stable and highly marketable asset, especially as bond markets face challenges and relations with Western nations become strained.
Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, emphasizes that China’s gold acquisition is likely a diversification strategy and an attempt to reduce vulnerability to potential U.S. sanctions, drawing parallels with the situations in Russia and Iran.
Central bank gold buying in 2022 reached a historic high at 1,136 tons, marking the 13th consecutive year of net purchases. The 2023 Central Bank Gold Reserve Survey by the World Gold Council reveals that 24% of central banks plan to add more gold to their reserves in the next 12 months, with 71% anticipating a global increase in reserves—a 10-point rise from the previous year.