China to ‘expand the country’s market share and influence on prices in the international gold market’ – Hong Kong official

Joseph Chan Ho-lim, Hong Kong’s Undersecretary for Financial Services and the Treasury, announced at the first gold trading session of the new Year of the Horse that the government intends to make a “full push” to transform the city into a regional gold storage and trading hub.

“We will expand the country’s market share and influence on prices in the international gold market,” he said.

The plan includes the expansion of Hong Kong’s gold storage capacity to more than 2,000 metric tonnes within the next three years, incentivizing bullion dealers to establish or enlarge refining facilities in the city, and strengthening cross-border cooperation with mainland authorities in the bullion sector.

Among the cornerstones of the initiative is the imminent launch of a fully state-owned gold clearing system, which is slated to begin trial operations later this year. The platform is designed to provide the clearing and settlement services necessary to position Hong Kong as a credible alternative bullion marketplace to Western hubs like London.

Local authorities are also seeking closer alignment between the Shanghai Gold Exchange and Hong Kong’s own gold market, which will also serve to deepen the financial integration between the mainland and the Special Administrative Region.

And, in a move to enhance regulatory coordination and liquidity flows between Hong Kong and the coastal mainland, the Hong Kong government has signed a memorandum of cooperation with the Shenzhen Municipal Financial Regulatory Bureau to support local gold dealers.

Chan said that the broader objective is to expand China’s market share and influence over international gold pricing, which have historically been controlled by Western financial centers.

In late 2024, Hong Kong’s chief executive first announced their intention to become a leading hub of the global gold trade.

John Lee, chief executive of the Hong Kong Special Administrative Region (HKSAR), announced his administration’s intention to build Hong Kong into an international gold trading center.

Lee noted that Hong Kong is already among the world's largest import and export markets for gold by volume, and said that Hong Kong's security and stability within the complex geopolitical environment makes it an attractive location for investors for gold storage, which in turn supports related activities such as gold trading, settlement, and delivery.

“This will spur development of the related industry chain, ranging from investment transactions, derivatives, insurance, storage, to trading and logistic services,” he said.

And late last year, several Asian nations expressed interest in storing their sovereign gold with the Shanghai Gold Exchange (SGE) as it expands its vaults offshore.

According to a report from Bloomberg, Cambodia’s central bank is expected to be among the first countries to store part of its gold reserves in SGE vaults located in Shenzhen’s bonded zone. The report also noted that other unnamed central banks have expressed interest in storing their gold with China.

Cambodia’s central bank holds about 54 tons of gold, representing roughly 25% of its $26 billion in foreign exchange reserves, according to data from the World Gold Council.

Cambodia’s plan to relocate some of its gold holdings is not a major surprise, as China is a key economic ally. Through its Belt and Road Initiative, Chinese firms have helped finance and construct much of Cambodia’s infrastructure in recent years — from a new airport in the capital, Phnom Penh, to expressways and canals.

China also holds roughly one-third of Cambodia’s debt, and trade between the two countries rose to a record $15 billion in 2024.

Analysts note that China is looking to capitalize on the growing trend of deglobalization as the U.S. increasingly weaponizes the dollar and its economy. At the same time, a growing number of nations have repatriated their gold from international hubs like London to hold within their own borders.

China’s push to attract official gold reserves is just one component of its broader strategy to reshape the global gold market, along with the SGE’s plans to expand its network of offshore vaults in Hong Kong, helping raise the profile of its yuan-denominated precious metals products beyond mainland China.