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China to deregulate gold market in two years-paper

SHANGHAI: China will deregulate its gold market within two years and encourage foreign investment in the sector as Beijing prepares to enter the World Trade Organisation, the China Daily Business Weekly said on Sunday.

The government would soon open an gold exchange as the first step to deregulate, the official newspaper quoted Wang Dexue, chief of the Gold Administration under the State Economic and Trade Commission (SETC), as saying.

The People's Bank of China is now the sole intermediary between gold producers and buyers. The gold sector sees little foreign investment under the tight control of the central bank.

But the SETC and the State Development Planning Commission were working out programmes to remove barriers to foreign investment in the sector and allow risky prospecting for gold using foreign investment, Wang was quoted as saying.

"The sector must explore more fund-raising channels, including foreign investment" to meet challenges stemming from China's accession to the WTO, which is expected later this year, the newspaper quoted Wang as saying.

The newspaper did not give further details nor say whether China would abolish a present ban on wholly foreign-funded gold mines.

Late last year, the World Gold Council urged China to deregulate the gold market gradually, first freeing up the domestic market and then opening up internationally.

China liberalised silver trade at the start of this year and set up the Huatong silver exchange in Shanghai, a move seen as a prelude to the deregulation of the gold market.

China produced 169 tonnes of gold last year, down slightly from 172 tonnes in 1998. The output target for 2000 is 175 tonnes, official media have said.-Reuters