China’s central bank had previously imposed restrictions on quotas used to import gold into the country by commercial bank, which are mainly responsible for gold entering into the country. This was part of measures to stop the flow of capital leaving the country.
In a significant development, China’s central bank has eased restrictions on the import of gold bullion, said industry sources. The restrictions, placed earlier this year since May, had stopped an estimated 300-500 tonnes of gold, worth $15-25 billion at current prices, from entering the country.
Those measures were possibly aimed at reducing the outflow of capital as well as to bolster the yuan, which has fallen to its 11-year low against the dollar, midst a growing U.S-China trade war.
Last week, China’s central bank began to reissue quotas, although they were for lower amounts, said three sources with direct knowledge of the matter in Asia and London but without specifying exact amounts.
“Some (quotas) have been given,” said a source while adding that these were “less than usual.”
It’s a “partial lift” of the restrictions, clarified another source.
China is the world’s biggest importer of gold with nearly 1,500 tonnes of the metal, worth around $60 billion, entered the country in 2018, according to its customs data.
According to official data, China’s gold reserves rose by 500% to around 2,000 tonnes.
Although there is a dirth of data for capital outflows but one can guesstimate it from a measure from China’s balance of payments called errors and omissions which points to $88 billion leaving the country in the first three months of 2019.